CRICKET MARKETING may have dreamed up the blue billion tag to put a number to the fans of this pan-India passion, but Parliament has been rocked twice in the past two weeks over a rather different figure — a trillion and a half of Indian deposits in Swiss banks.
When Communist Party of India (CPI) Deputy General Secretary Sudhakar Reddy raised the issue of Indian deposits in Swiss banks, his mention of the $1.45 trillion figure and that it was double the country’s gross domestic product shook the Lok Sabha. External Affairs Minister Pranab Mukherjee, currently in charge of the finance portfolio, didn’t take note and left it to his deputy, Pawan Kumar Bansal, to say a probe would be ordered.
Reddy was quoting a Swiss Banking Association report of 2006-07 that said India led the top five countries in deposits — the others are Russia, the UK, Ukraine and China. “Everyone in the House was rattled,” says Reddy, whose repeated statements in Parliament were a follow-up of the two-page letter he’d written to the Prime Minister after being informed about a relatively unknown NGO.
“If equally distributed, each Indian will get Rs 100,000,” Reddy wrote in his letter, which evoked no response from the Prime Minister’s Office. But, in a late reaction, the Communist Party of India- Marxist (CPM) urged New Delhi to seek details of these deposits.
The point being made by the Left parties is that the famed Swiss banks secrecy is not an absolute. Recently, banking details of eight US clients of Switzerland’s UBS were sent to Washington, despite a late Swiss court order blocking the move. “If the US can do it, nothing prevents the Indian Government from getting the details,” said the CPM Politburo.
A report in The Washington Post says that, in addition to details of the eight clients, names of more than 240 clients have been sent by UBS. The US Justice Department is trying to break through Switzerland’s legendary banking secrecy to go after American tax evaders: UBS admitted to the tax fraud and agreed to pay $780 million. However, UBS rejected the demand that it disclose identities of some 52,000 US customers who allegedly evaded taxes. The US tax office argues US citizens are hiding about $14.8 billion in such accounts.
Reddy, Chairman of the Lok Sabha Committee on Labour, has moved a motion slated for discussion on February 27, as part of the Private Members Resolution. “We have to get to the bottom of this case,” Reddy told TEHELKA.
In New Delhi, Swiss Ambassador to India Dominique Dreyer acknowledged the flow of black money from India and other countries into Swiss banks, but said that new legislation in Switzerland could make stashing such money difficult in the future. “The banks themselves monitor the origin stringently,” Dreyer said while celebrating 60 years of the Indo-Swiss Friendship Treaty. “Switzerland was accused of giving shelter to black money. It would not be stopped 100 per cent (under the new law) but controlled up to a certain limit.”
But those familiar with Swiss banks say that the chances of New Delhi seeking and obtaining a greater list of names than that sent to Washington seems doomed because of the new court order that arms the European country’s national regulator, FINMA. Swiss newspaper Tribune De Geneve quoted FINMA’s Alain Bischel saying the tribunal’s order forbade the Swiss bank regulator from giving the plaintiffs’ “banking documents to third parties” or risk legal proceedings. Also, Switzerland’s populist Swiss People’s Party (SVP) has called for a Parliament debate, demanding retaliation against the US probe and threats to the prized banking secrecy.
It is estimated that nearly $2.2 trillion, a third of $7 trillion the world’s wealthy have spirited into offshore tax havens, is stashed in Swiss banks. India, from where an estimated 80,000 people travel to Switzerland every year, has the largest slice of the secret pie. “There are no orders to probe,” says a senior official of the Enforcement Directorate. Agrees Admiral RH Tahiliani, former naval chief who now leads Transparency International India: “Billions have been parked in Switzerland, with Indians topping the list.”
With those levels of deposits, and Switzerland only one of the popular tax havens in the world (Lichtenstein, the Bahamas and the Cayman Islands also ask no questions), it is barely surprising that the integrity score of India has been 3.4 in 2007-08 (on a scale of 10) as compared to Denmark and Finland scoring a perfect 10. But since the wealth parked in these accounts is possessed both by rich businessmen and rich politicians, the chances that any government will be pushed enough to demand their banking details are slim indeed.