Demonetisation was a major failure, but it helped prove one thing
The demonetisation drive might have been a resounding failure but it has helped bring one fact to the table.
India excels not just in corruption, but in laundering black money into white.
These are interesting conclusions that enforcement agencies have arrived at a year after demonetisation when perhaps for the first time all investigative agencies made a concerted effort to go after shell companies and unearth the desperately sought after black money.
A detailed report prepared by the Enforcement Directorate (ED) says, "The plague of money laundering that is killing Indian economy was truly revealed during post demonetisation searches. The serpent head of this demon is money of corruption and illegal wealth acquired through banking frauds. As part of its risk assessment exercise ED found that fraud and cheating are the two major threats the country is facing".
In fact Operation Unearth Black Money has blown several myths built over the years and that is that real estate is the number one source of black money followed by bullion and gems and jewellery.
It now appears that shell companies are the single-largest source of hoarding black money. In fact nearly half of the black money in the country or 48 per cent of it is actually parked in shell companies. Real estate accounts for only 35 per cent of the black money in the country. In fact, the report says, "It is worth mentioning that even in the real estate sector the money for investments has been coming through financial institutions using a maze of shell companies. Therefore shell companies are the major modus operandi through which money is laundered."
In fact, chartered accountants and bank officials, whose mandate it is to keep tabs and prevent the generation of black money, were at the forefront of converting illegitimate wealth into legitimate assets. So brazen was the violation that even civil servants were a part of it. "In one such case, involving IAS officer Babu Lal Agarwal, his chartered accountant Sunil Agrawal operated shell companies from his office address," says the ED.
And while agencies tom-tom big names like RJD chief Lalu Prasad Yadav's daughter and son-in-law getting caught while using shell companies, government sources say demonetisation had nothing to do with it. "The exercise had begun much earlier. In fact, it started with the Rs 2 crore funding coming in for the Aam Aadmi Party through a shell company. Income Tax's directorate of investigation unit decided to check the other entries this operator had given and thus came tumbling out a maze of secrets that led sleuths to not just Misa Bharati but UP engineer, Yadav Singh, and top beneficiaries through him from the BSP, but the trail also led to the unearthing of the link between Robert Vadra and arms dealer Sanjay Bhandari," say tax officials.
But a name that cropped up again and again in investigations of all agencies was of New Delhi-based high profile lawyer Rohit Tandon. He was first raided a month before the November 8 demonetisation announcement and twice post that.
Tandon's links with Kolkata businessman-cum-entry-operator, Parasmal Lodha, are of particular interest given that Lodha has claimed to be close to several member of the judiciary and closely entrenched in the corridors of power in Delhi.
Which is why what is mystifying is the kid-glove treatment given to Tandon particularly by the Enforcement Directorate. In the initial case filed by the ED, Tandon was not even mentioned a prime accused and his name was added only after a dressing down from the judge concerned. So too was the case when Tandon applied for bail.