Panama Papers have once again given the NDA government an opportunity to book those who hold black money on foreign shores. Will the government seize it or will it go back to the dubious ways of the UPA government that did not want to touch black money with a bargepole? Time will tell if the ruling party makes good on the promises that it made while it was in the opposition (“We will bring back so much black money stashed abroad that Rs 15 lakh could be deposited in every Indian’s bank account”). Panama Papers have brought out in the public domain the names of thousands of people across the globe (500 Indians are among them) – some of them big names in the fields of politics, business, entertainment, sports – who invested in shell companies in Panama. These names have been culled out from the leakages coming out of just one legal firm, Mossac Fonseca (there are dozens of such companies in Panama itself and there are dozens of cities, like Panama, which serve as tax havens for the rich to park their black money). To that extent, the Panama Papers tell us only a small part of the ‘black money’ story.
But, in itself, the revelations are huge – ‘11.5 million documents, emails, financial spreadsheets, passport information, corporate records from 1977 till 2015’ – overall 2.6 terabytes of information, possibly 100 times more data than the US State department diplomatic cables released by the WikiLeaks that startled the world about six years ago. One reason why this secret shell company information came to the public domain was the absence of the state actor in its dissemination. In the case of the HSBC, the information about the Indian clients of the bank at Geneva was given to the government of India by the French authorities in 2011, but the UPA government sat tight over it. Despite the repeated hectoring of the BJP to disclose the information, the then finance minister Pranab Mukherjee insisted that no such information could be placed in the public domain due to confidentiality clause built into the business transactions. When P Chidambaram became the finance minister in 2012, he echoed the Pranab line. And the biggest irony is that Arun Jaitley, the BJP leader, who was most vocal for the public display of the names of the HSBC Geneva account holders started singing the same tune as that of his UPA predecessors when he became the finance minister in the BJP government in 2014.
It was only in February 2015 that The Indian Express revealed the list of 1195 account holders and their bank balances for the year 2006-07 in HSBC’s Geneva branch. Just as German newspaper Suddeutsche Zeitung has been central to the revelations of the Panama Papers, the French newspaper Le Monde had coordinated the worldwide publication of the information last year.
The Panama Papers were leaked to the German newspaper, possibly by an employee of the law firm, which decided to share it with the Washington-based International Consortium of Investigative Journalists which in turn involved 107 media organizations in 78 countries. The Indian Express was the only media group from India to be part of this exercise. All the newspapers, in a coordinated and meticulous analysis of data over eight months, put the big story in the public domain. These media organizations have not been prosecuted; they have not been restrained by the Confidentiality Clause. Why is it that the Indian government – irrespective of which party is in power, a ‘corrupt’ Congress or a ‘Janus-faced’ BJP — takes shelter under the ruse of international agreement to hide information on black money?
That is because such governments exist to protect the interest of the rich and powerful in the first place. The Machiavellian guideline for these political parties is: unearthing black money is an election campaign slogan that must be put in the back-burner as soon as you assume the mantle of power; so long as you are in the opposition keep harping on it. This Machiavellian dictate is not surprising. After all, these parties have to spend thousands of crores of rupees to fight their electoral battles and only those who have amassed a lot of black money at home and abroad would come up with spectacularly generous contributions. So their interests have to be protected while in power. It is understandable that the hands of the political executives are tied for electoral reasons. One expected at least the Reserve Bank of India (RBI) — which is ostensibly an autonomous institution and whose officials are not constrained by electoral considerations — to be proactive to bring black money out in the open. But RBI governors have proven to be the lackeys of the political executives trotting out the same agenda and same excuses. Look at the current governor, Raghuram Rajan who sheds crocodile tears for public accountability, but he has jumped to the defence of the offshore companies floated by the Indians as legitimate.
Yes, Mr Rajan: these companies may be in a technical sense legitimate, because people like you, or your predecessors, left loopholes while making the policy of offshore investment so that investing in shell companies – often these companies have no activities or income — shrouded in layers of secrecy becomes a legitimate activity. Let us accept, for a moment, what Mr Rajan is saying. If these investments made by Amitabh Bachchans, Harish Salves, and a string of big business houses are legitimate, then it must have been recorded in their income-tax transactions over the years. Just to lay any doubt to rest, the income tax details of those named in the Panama Papers be made public. All these gentlemen who are claiming that they have done no wrong will be able to re-establish their credentials if they have declared the offshore investments in their income tax returns.
But Mr Rajan is stoutly opposed to such an idea: he says that even the revelation of the income-tax statement of the previous years would be a breach of the condition of privacy for any business transaction. His conclusion: these gentlemen are entrepreneurs putting India on the world map; they should be hailed, not condemned. When political executives and financial regulators collude to protect the fraudulent rich, there is a need for an Iceland-like popular movement to show them their place – certainly, out of office and, possibly, in prison.
Updated Date: Apr 11, 2016 11:44 AM