The real battle is in India

What will Lutyens Delhi do after it has smashed illegal Indian accounts in Switzerland
Voices Corruption Tuesday, November 29, 2016 - 09:11

There is a monotonous regularity with which reports in India surface about ‘progress’ in retrieving monies ‘stashed’ (what an ugly word) in Swiss bank accounts. News that the Indian government will start receiving financial information of accounts held by Indians in Switzerland from 2018 on an automatic basis did the rounds recently. Everytime something like this pops up, my friends in Switzerland and India ring, one wondering what is going on and the other asking why nothing is. That’s what happens when the routine is framed as success.

In the recent instance, the Swiss Federal Department of Finance (DOF) has said the signing of a joint declaration with India confirms Switzerland’s international commitment to implementing the automatic exchange of information (AEOI). The Alpine nation has been on a signing spree with countries outside the European Union (EU) to bring non-EU countries on the same page as itself.  India is now an adherent to the AEOI, complying with the required administrative and legal details.  Calling the signing of the declaration a "big step" Revenue Secretary Hasmukh Adia tweeted: "The income tax department will be able to obtain information from accounts of all Indians stashed in Switzerland from 2018 onwards."

Sources in Switzerland told The News Minute (TNM) that this exchange will become effective from September 2019 and does not have any retrospective effect. Three years is along time for crooks to flee if any still remain. Credit must be given where it is due and the Narendra Modi government deserves praise for completing all the formalities which the UPA government could have done but did not. However, that is only part of the story. The submerged part of the iceberg which the world in general and the Swiss in particular are aware of is India’s own shabby handling of information, tampering of evidence and disappearance of documents topped by a peculiar habit of blaming Switzertlad for delays for what is our own failure to punish the guilty. Indian tax officials traveling to Switzerland is not news and the government would be well advised to save its breath over procederal matters. Look at it another way – why did it take the government so long to complete all the formalities ?

Secret Swiss bank accounts are dead and I will signal three relevant issues. It is very difficult if not impossible to open an account in Switzerland today with undeclared money and assets. Pushed by Swiss voters and national laws on cleaning up their banking system at the turn of this century and hammered in no small measure by America’s Internal Revenue System (IRS), Swiss banks are over cautious with new clients. Compliance and Know Your Client (KYC) clauses are punitive and the onus on bank employees is punishing.

Dirty money has been going to Delaware in the United States (US), British Virgin islands (Bvi) and Cayman for sometime now, much to the ire of Swiss bankers who say they have been unfairly treated. Secondly, the leaks – Swiss leaks, Panama leaks, Liechstentein leaks – have given impetus to the clean up, but Swiss laws cannot be activated on the basis of leaks. I speak from experience. The Bofors documents containing information about bribes leaked to me from Sweden had to be verified by Swiss courts before they could be handed over to India. That proces took almost seven years. Once handed over to India, Lutyens’ Delhi did a thorough job of destroying the evidence.

And that brings me to the third issue. I remain sceptical about what New Delhi will do with documents and names of illegitimate accounts once they get them from Switzerland. If Bofors showed me how every institution in our democracy could be sacrificed, other stories are testimony to how swiftly and in how many ways this can be repeated and the bogey of hunting down the corrupt is foisted. Fighting corruption was an electoral promise of the Narendra Modi government and he promised to place cash in every Indian’s pocket – in other words a certain amount was to accrue to the nation. For consecutive Sundays – and the stories always broke on Sundays - following the setting up of the new government in 2014 there was news about monies from Switzerland heading to India. If it is a Sunday, it must be a blackmoney story with dateline Berne was the joke.

I have dealt with the Swiss Department of Justice and Police (DFJP) and their colleagues in the DOF for over two decades. Among my friends in Switzerland are lawyers, politicians, bankers and high ranking police officials. They are at the cutting edge of the information curve for historical reasons but more so in recent times because of the pressure the country faces from all quarters. My friends can tell when a government is serious and when it is buying time and wasting theirs. In its final months, the last UPA government tinkered with ‘tackling’ black money ‘stashed’ abroad especially in Swiss banks. Before that, the first avatar of the NDA kept up the pretense too.  India’s track record in closing such cases and punishing the guilty is not  glittering one. The Modi government remains credible for now,  but is hanging there by the skin of its teeth. Gloating over administrative details is akin to jumping with joy when you get a free upgrade from economy to business because you checked in early and the flight is full.

 

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