Punishing the Innocents to Let Off the Guilty

by Chidambaram N.

The pronouncement of the highest judicial authority of our country has put the govern-ment in the dock for adding to the miseries of the general masses. The Supreme Court on the seventh day after a sudden ban on Rs 500 and Rs 1000 notes, that is, on November 15, 2016, said that the desperate rush of people to stand in queues at banks and ATMs for cash was conclusive proof that there was some collateral damage. The Apex Court in fact did not mince words when it told the Centre: “You call it surgical strike or carpet bombing. There is some collateral damage.”

Though the Court refused to stay the decision acting on a batch of petitions, it asked the Central Government to submit a report on steps taken to ease the crunch for citizens. Accepting the outcry from all quarters as genuine, the Court asserted: “The common man should not suffer,” suggesting that the government should raise the withdrawal limit. Chief Justice of India T. S. Thakur observed: “The general feeling is it is causing inconvenience to the common man.”

The Modi Government, in prioritising confi-dentiality with selective leak-outs of the so- called game-changing move, was landed by its supporters who described the step as a ‘surgical strike’ against black money. As days passed, even the supporters started questioning the efficacy of the move startled at the borrowed hardships for law-abiding citizens, who form the overwhelming majority. To say the least, Modi and his learned advisers took for granted the general masses and totally failed to comprehend the fallouts of going all-out to enable the black moneyed to whiten their ill-begotten wealth.

 The very fact that the ruling party (BJP) did not refute the charge that the West Bengal unit had deposited crores worth of Rs 500 and Rs 1000 currencies substantiates the official leak-outs. It is certain therefore that the ruling party, its remote-controller, the RSS, and other affiliated organisations must have been aware of the move and took care of their currencies well in advance. A Supreme Court-monitored probe by a special investigation team into the accounts of at least one hundred top corporate houses will expose the so-called confidentiality of the move as well as the real aim of printing the high-denomination currency of Rs 2000.

Besides, the inordinate delay in investigating and prosecuting the alleged illegal money-possessors, named by various national and international probe agencies, speaks volumes of the government’s real intentions. None other than the policy-insiders say they had reached a point where the battle against forged and hidden currency, which forms only a small percentage of the voluminous black money, appeared to be a losing one. Justifying the incoherent, incomprehensible and wrongly targeted culling of the currencies, Narendra Modi was forced to speak six times and his Finance Minister, Arun Jaitley, and his secretaries to hold eight formal briefings for the media, not to count the numerous informal ones. Had the government been sincere it would have initiated the process of prosecution of those engaged in generating black money and attachment of their assets as the maiden action after Modi took over the reins thirty months ago. Instead it chose to burden the honest and law-abiding masses as well as the poor daily wage-earners.

Even seven months after the revelation by the Panama Papers, the probe into the huge money stashed abroad and alleged tax violations by Indians named in the global exposé, nothing substantive has been done. The revelations point fingers at 415 Indians.

Five months after the Panama Papers, the biggest-ever leak of offshore entities registered by the Panama-headquartered law firm Mossack Fonseca, comes the Bahama Leaks, which reveals incorporation details of more than 175,000 companies, trusts and foundations registered in the Bahamas, the Caribbean tax haven. This new cache of documents, received by the German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and its media partners, relates to companies registered between 1990 and early 2016.

It lifts the veil of secrecy that the Bahamas offers to multinational corporations and also rich and powerful individuals by revealing the names of office-bearers, shareholders or beneficial owners of the offshore entities.

An investigation of the list has shown that the Bahama Leaks has 475 India-related files linked to corporate personalities across sectors such as mines and metals, electronics, real estate, media and entertainment.

Some of them have also figured in the Panama Papers’ global investigation, reported in April this year. They include Anil Agarwal of the Vedanta Group; Kabir Mulchandani of the erstwhile Baron Group who had made it big in the domestic consumer electronics sector with Akai, Aiwa and Hitachi tie-ups in the 1990s; Fashion TV India promoter Rajan Madhu; Aman Gupta, chairman and chief executive of premium Finnish water brand Veen Waters. These are the prominent personalities associated with companies in the Bahama Leaks.

Some names that figured in the Panama Papers investigation have come up in the Bahama Leaks too. The two sets of data thus intersect at several points, uncovering hidden layers of offshore secrecy.

The release of the Bahama Leaks comes days before the September 30 deadline of the govern-ment’s much-publicised Income Disclosure Scheme (IDS). The IDS opens a rare window for individuals and corporations to declare their hitherto undisclosed income and come clean by paying 45 per cent tax as penalty.

The names of actors Amitabh Bachchan and Aishwarya Rai Bachchan, real estate tycoon K.P. Singh and late gangster Iqbal Mirchi figured in a list of over 500 Indians who allegedly used a law firm in Panama to set up offshore entities in tax havens across the world. A study of more than 11 million documents from the secret files of Mossack Fonseca, the Panama law firm, showed that Indians possibly violated tax rules or masked ownership of firms they allegedly set up abroad.

The newspaper claimed that while Aishwarya Rai was a shareholder of a firm in the British Virgin Islands, her father-in-law—superstar Amitabh Bachchan—was the Director of four shipping companies in the Bahamas. It said Indiabulls owner Sameer Gahlaut acquired “three top London properties” via “entities” in the Bahamas and Jersey, and DLF promoter K.P. Singh and his family owned firms in the British Virgin Islands.

The promoters of Apollo Tyres, business tycoon Gautam Adani’s elder brother Vinod Adani, West Bengal politician Shishir Bajoria and former Loksatta Party leader Anurag Kejriwal were some other Indians named in the newspaper report.

Until 2003, the Reserve Bank of India (RBI)’s norms did not allow an Indian citizen to set up an overseas entity. In 2004, resident Indians were allowed to remit funds of up to 25,000 dollars a year under the Liberalised Remittance Scheme (LRS)—the limit of which stands at 250,000 dollars a year now.

While the RBI let individuals buy shares under the LRS, it never permitted them to set up companies abroad. The Mossack Fonseca documents allegedly show companies were set up long before the rules were changed, and the purpose may have been to park foreign exchange in a tax haven.

The Swiss leaks focus on Mukesh Ambani, the richest Indian industrialist and Chairman of Reliance Industries Ltd, younger brother of Mukesh, Anil Ambani,Founder Chairman of Jet Airways, Naresh Goyal, Dabur group Chairman Dr Anand Chand Burman and wife Minnie Burman, Director Sidharth Burman, Anuragh Dalmia, Vice Chairman of Dalmia (Bros) Pvt Ltd which owns GHCL (Gujarat Heavy Chemicals Limited) and GTC (Golden Tobacco Company), Manu Chhabria’s family members, Annu Tandon, Dattaraj Vassudev Salgaocar, Dipti Salgaocar of V. M. Salgaocar Group, Kuldip Singh Dhingra, Gurbachan Singh Dhingra of Berger Paints, late Ladli Pershad Jaiswal of Jagatjit Industries Ltd, Shravan Gupta, Shilpi Gupta of Emaar MGF, Kumar Venu Raman of the Essar Group, Bhushan Lal Sawhney and family of Sawhney Tyres, Adm S.M. Nanda and Suresh Nanda of arms dealer firm Crown Corporation, and Bhadra Shyam Kothari family of the Kothari Group.

Other prominent people named include Mohammad Hasseeb Shaw ofthe Srinagar-based Cottage Arts Emporium, Dharam Vir Taneja a former banker, Alok Bhartia of Taegu Tec India, a subsidiary of a South Korean manufacturer of tools and instruments, Bishwanath Garodia of Mangal Steel Ltd, Brijendra Kumar Poddar of a West Bengal business family, Subhash Vasant Sathe, Indrani Sathe of Sun Vacuum Formers Pvt Ltd and TRW Sun Steering Wheels Pvt Ltd, Sanjiv Lamba, Delhi businessman and owner of Diplomat Hotel, Harshavardhan Neotia, Vinod Kumar Neotia of the Ambuja Neotia Group and co-owner of a Super League football team, Surinder Kapur of Sona Koyo, Michael Aram Wolohojian of Michael Aram Export Company, Smita Jaydev Thackeray, president of IMPPA (Indian Motion Pictures’ Producers Association), Members of the second and third generation of the Dalmia Group— primarily Dalmia Cement, Jitendra Virwani is of Embassy Group, Ashvin Prakash Kumar, Rajan Nanda of engineering conglomerate Escorts Ltd, Neelam Narayan Rane and elder son Nilesh, Yashovardhan Birla of the Yash Birla Group, Pradip Kumar Khaitan, Haigreve Khaitan, of Khaitan and Company, Chandru Lachmandas Raheja of the K Raheja Corporation, Charu Bhartia Modi of MAII and of Modi Enterprises and Indofil Industries, Ritu (Mahima) Chaudhry, Jagdish Rai Sood of the Eros Group of companies and Om Prakash Lohia of the Indo Rama Group.

The litmus test to prove the sincerity of the Modi Government’s fight against black money rests on how he tackles the above and many others not mentioned due to lack of space and confirmed probe allegations and/or details.

The author is a well-known economic journalist.