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Name and shame begins but politicians won't appear on black money list

The government today announced three names, two of them unknown and one from the well known Dabur family —Pradip Burman. The government has been under pressure to disclose names but disclosure of this information is extremely powerful.

As long as the government controls or manages the disclosure it had enormous power over a very large section of people and the black economy. Once the names are out the government, and more importantly bureaucrats in the finance ministry who have access to this information will command enormous clout.

While the BJP spokesperson made it a political issue and stated the discomfort of Congress on disclosing the names,  the truth is it is not the Congress which is uncomfortable but every businessman who has in the past dealt with Swiss banks is feeling uncomfortable. Though, over the last five years, especially after the leak of the HSBC list and pressure on Swiss banks to disclose, most black money has shifted to other countries.

For instance, a very powerful political family of Haryana started diversifying its bank accounts away from Switzerland to other countries. They started putting their money like Russian Oligarchs in banks in East Europe and South America. These banks  would promise complete confidentiality and are small enough to escape global scrutiny. At the last count the family had shipped money to 53 odd countries across the world. So it is unlikely that very many big politicians who were aware of the Supreme Court case and have been careful will be named.

But coming back to the point of disclosure, once the names have been disclosed there will be media attention, but for some of these operators it may not result in loss of reputation. In a small town like Rajkot, where Pankaj Chimanlal Lodhiya resides the disclosure led to rush of TV cameras and will lend him notoriety and fame. Chimanlal comes from a family of jewelers and his father is much more well known in the community. Pankajbhai has denied having any foreign bank accounts as a bullion trader it is unlikely to work without them. The big issue is that post this disclosure what is the action that the SC takes or has any other department of the government already taken action.

BJP spokesperson said, today that,“We are not adverse to revealing the names but they will all only be released as and when the chargesheet is filed and investigation is over."

From this statement it means that a chargesheet has also been filed against the three people who have been named today.

 Name and shame begins but politicians wont appear on black money list

The phone lines to power brokers in Delhi are already burning as the biggest fear of a businessman has been triggered. Thinkstock Images

The chargesheet would be interesting as it would reveal the intent and seriousness of the government to pursue these cases. This is the second lever of power. Once the information is disclosed, all the accused will rush to Delhi. Others who fear their names may also be on the list will rush to prevent the chargesheets from being filed.

The phone lines to power brokers in Delhi are already burning  as the biggest fear of a businessman has  been triggered. A witch-hunt has begun and the bureaucrats controlling the list, the ones deciding the chargesheet are the most powerful people in India.

Will this result in the money coming back to India? Will the disclosure of names be followed by action to ensure that the money flows back? These are the two most important things. Holding a foreign bank account is not a crime if the income has been disclosed and tax been paid. As per RBI rules an Indian can legitimately deposit $1,25,000 in a foreign bank per year.

The name and shame game can only last for a while, it can create headlines and show that the government has acted. For a while the government has shifted the pressure on disclosure by feeding the media or the public three names. But the bigger issue is the fear psychosis that will now grip the underground black economy. Will the government use the fear psychosis to its benefit in pushing through a well designed voluntary disclosure of income scheme? In June I had argued for bringing in a disclosure of income scheme that would help bringing Rs 100,000 odd crores of money slashed abroad.

The disclosure of names, the chargesheets and the witch-hunt just helps corrupt bureaucrats, not the country. It gives too much power to a very small section of people and will not result in anything but forgotten headlines.

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Updated Date: Oct 28, 2014 07:25:48 IST