Indian lawmakers press for more action on wealth in offshore accounts

Lawmakers in India want to get tough with wealthy investors and business owners who have billions of dollars of untaxed money in overseas bank accounts.

India’s Supreme Court is taking a stance on the issue and has gone as far as accusing the government of being reluctant to publish details about the money held offshore.

Estimates for the amount of money deposited illegally in overseas bank accounts and tax havens by wealthy Indians and companies range from $500 billion to $1.4 trillion.

‘You know the names, you know where the money is lying,’ Judge Sudershan Reddy told solicitor general Gopal Subramanium during a hearing responding to a petition filed by anti corruption campaigners.

Reddy said that not enough is being done against those, some of whom could be connected with criminal activity such arms deals, smuggling, narcotics, and drug trafficking. The court was hearing a petition moved by former law minister and criminal lawyer Ram Jethmalani, pointing to the government’s inaction in bringing back huge amounts stashed in foreign banks.

The solicitor general said the government is aware of the seriousness of the issue and that a special team of experts is analysing information received from abroad.

But the government has insisted that international agreements and other legal hurdles prevent it from exposing the identity of Indian tax evaders. It recently filed an affidavit with the court restricting information on money deposited by 26 unidentified Indians in a Liechtenstein bank.

Finance Minister Pranab Mukherjee said that the authorities are moving towards completing negotiations on tax information exchange agreements with 10 tax havens, including Bermuda, and has started talks with 65 other countries. Among recently signed agreements is one with Norway and an agreement is forthcoming with Switzerland, he added.

Following the G-20 communiqué of April 2009, significant strides have made by world economies towards implementing globally accepted transparency standards in tax matters. The OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes underwent serious restructuring in September 2009 at the behest of the G20, and now has 95 member countries including G20, all OECD members and most major financial centres.

Experts warn however that the black money scandal, as it is called in India, needs to be tackled far more stringently if it is not to severely damage the country's economy. Campaign group Global Financial Integrity, estimates that in 2008, India lost the equivalent of around 36% of its GDP abroad.

M. R. Venkatesh, an Indian accountant who has just published a book on corruption in India, said that the government was hiding behind technicalities to stop it having to share data on tax evasion.