Why India may never bring back black money stashed abroad

The government has furnished a list of 627 Indians having accounts in foreign banks to the Supreme Court after it was pulled up by the apex court, but that still does little to bring back black money as the government had promised. Here’s why.

The list, if reports are to be believed, was provided by HSBC Bank contains no big names that are connected to political parties or businessmen. These accounts are old and show relatively small deposits. For the public, who had been waiting to hear the names of some of the big sharks, that would be a clear disappointment. 

Special Investigations Team (SIT) chairman Justice MB Shah has even said the probe was back to square one, as the list submitted by the government, was the same submitted last June. Also, if the accounts pre-date 2006, there is scepticism that investigations will result in retrieving anything substantial, since eight years is ample time for any offender to cover his tracks.

Second, although the government has presented the information to the court in a sealed envelope, it acknowledges that there is no guarantee that the names will remain confidential, as assured under the various agreements India has entered into with the countries in question. It has now deferred signing of an important multilateral agreement in Berlin that was to facilitate access to financial information on taxpayers abroad.

Even the US had big trouble getting Swiss banks declare names of Americans who dodged taxes, and had to work out multi-billion dollar global resolution. As part of the agreement, US government agencies invited the banks to pay a fine, get out of their undeclared off-shore banking businesses for US citizens, and disclose their client names to the US agencies. If that was the arm-twisting the US had to do to get European banks to reveal names of offenders, one can imagine the difficulty India would face to get those banks to toe its line.

Finally, banks would be unwilling to reveal names, unless the government initiates some sort of criminal action against the tax evaders. Then the question would be, if the government knew those names, why did it not take action against them earlier? There is no doubt that the government would now be feeling the heat, trying to implement what was a much-hyped election promise. As the government struggles to comply with the apex court directives on one hand, and honour its bilateral treaties on the other, the illegal money stashed abroad will continue to be evasive as ever.