http://thewire.in/58640/black-money-investigation-a-feast-of-vultures/
BOOKS
Modi, Adani and Black Money. Where’s the Investigation Going?
BY JOSY JOSEPH ON 13/08/2016
The biggest black money case that has come up so far is that of the
Adani group, promoted by Gautam Adani, one of Modi’s closest
associates, writes Josy Joseph in his book A Feast of Vultures: The
Hidden Business of Democracy in India. Here’s an excerpt.
The practice of siphoning off ‘black money’ – the illegal earnings of
India’s rich and powerful – has many dire implications, including a
crippling effect on the country’s efforts at fighting poverty,
illiteracy and other socio-economic challenges, scuttling national
security priorities, fleecing the public exchequer and stymieing
competition.
The BJP, which was the main opposition party in 2011, constituted a
task force to study the phenomenon of black money and released a
report later. The following year, the UPA government presented a white
paper on black money in parliament. The presentation of this
ninety-seven-page report was among the many actions that the
government promised. Finance minister Pranab Mukherjee, who became the
thirteenth president of India a year later, admitted in the report:
‘There is no doubt that manifestation of black money in social,
economic and political space of our lives has a debilitating effect on
the institutions of governance and conduct of public policy in the
country. Governance failure and corruption in the system affect the
poor disproportionately. The success of an inclusive development
strategy critically depends on the capacity of our society to root out
the evil of corruption and black money from its very foundations. Our
endeavour in this regard requires a speedy transition towards more
transparent and result-oriented economic management systems in India.’
The white paper quoted a report by the World Bank in July 2010 that
estimated ‘shadow economies’ of 162 countries from 1999 to 2007. It
said that the weighted average size of the shadow economy (as a
percentage of official GDP) of these countries in 2007 was 31%
compared to 34% in 1999. For India, these figures were 20.7% and 23.2
% respectively. The government admitted that its own Department of
Industrial Policy and Promotion (DIPP) found that the foreign direct
investment from Mauritius between April 2000 and March 2011 was 41.8%
of the entire amount received by India.
‘It can be seen from this table that the two topmost sources of the
cumulative inflows from April 2000 to March 2011 are Mauritius (41.8%)
and Singapore (9.17%). Mauritius and Singapore with their small
economies cannot be the sources of such huge investments and it is
apparent that the investments are routed through these jurisdictions
for avoidance of taxes and/or for concealing the identities from the
revenue authorities of the ultimate investors, many of whom could
actually be Indian residents, who have invested in their own
companies, through a process known as round tripping’ – that was the
government accepting the reality.
A Feast of Vultures: The Hidden Business of Democracy in India by Josy
Joseph/Harper Collins
Josy Joseph’s A Feast of Vultures: The Hidden Business of Democracy in
India, Harper Collins, 2016
The big problem is that there are no reliable estimates on how much is
siphoned off, where it comes from, or what proportion of it may be
linked to criminal activities. Even the government does not know how
much of this black money comes from criminal proceeds and what
percentage is ‘just’ tax avoidance. Many of India’s successful
businessmen have over the years obtained the status of ‘non-resident
Indians’ to avoid paying income tax and answering uncomfortable
questions about their income and investments at home and abroad.
According to an estimate by the research agency New World Wealth in
March 2016, India saw the fourth biggest outflow of high-net-worth
individuals globally in 2015 with 4,000 millionaires changing their
domicile. Ironically, much of the information we have on how the
Indian system actually works comes from the result of investigations
abroad – the result of foreign firms trying to win contracts in India
coming to the attention of authorities back home.
Bribes are spread far and wide, and reach every level of the food
chain, from political leaders to the attendants guarding the doors of
government offices. With almost everyone benefiting from the largesse,
a conspiracy of silence sets in. And that, more than anything else,
explains why India’s corrupt procurement system rarely sees the
emergence of whistle-blowers.
On 28 May 2014, on its first day in office, Prime Minister Narendra
Modi’s BJP government announced its first significant decision: the
constitution of a special investigation team (SIT) led by a retired
Supreme Court judge to look into black money. In his high-decibel
campaign against the ruling UPA government prior to the general
election, Modi’s most frequent reference was to black money. He rode
the gigantic wave of anti-corruption that had built up around the
country. While the movement itself was mostly apolitical and
civil-society-driven, Modi was its biggest political beneficiary as he
unleashed the most expensive campaign India had ever seen: chartered
aircraft, helicopters, holograms, media campaigns, unabashed social
media and Internet strategies and the like. It was hardly surprising
then that, on his first day in office, Modi announced the setting up
of that SIT.
Ironically, the biggest black money case that has come up before the
SIT so far is that of the Adani group, promoted by Gautam Adani, one
of Modi’s closest associates. It is in his chartered aircraft that the
soon-to-be prime minister zipped around India, accusing the incumbent
government of not fighting corruption. The Adani group allegedly took
out over Rs 5,000 crore to tax havens, using inflated bills for the
import of power equipment from South Korea and China, the SIT on black
money was told by the Directorate of Revenue Intelligence (DRI) and
the Enforcement Directorate (ED).
Josy Joseph, author of A Feast of Vultures. Credit: josyjoseph.in
Josy Joseph, author of A Feast of Vultures. Credit: josyjoseph.in
According to a senior ED official associated with the SIT, if the
Adani case reaches its logical conclusion, the group will have to pay
a fine of around Rs 15,000 crore. ‘It is a watertight case,’ he said,
about the trail of documents showing how the group diverted Rs 5,468
crore to Mauritius via Dubai. The Adani group vehemently denies any
wrongdoing. Modi, after his rhetoric-filled ride to power, has been
silent.
Since Modi’s ascension to office, what has happened in the ED, which
had registered a preliminary case against Adani in Ahmedabad and was
handed details of DRI findings, is illustrative. The officer heading
the Ahmedabad branch of the directorate was raided by the CBI, which
accused him of possessing disproportionate assets. It failed to prove
anything at all, despite months of investigation. The two senior-most
officers in the Mumbai regional office, who oversaw the investigations
in Ahmedabad, were forced out of the agency. The tenure of Rajan S.
Katoch, who was heading the directorate when the case was opened, also
ended abruptly. Apart from the Adani case, the Ahmedabad ED
investigators were also pursuing some of the biggest money launderers
of Gujarat.
While I cannot prove bad faith in all those abrupt transfers, it must
be said that there has been no credible evidence that the Modi
government is working to bring back black money to India. Or indeed
that it will pursue the biggest black money case yet to emerge here.
This essay was extracted from Josy Joseph’s book, A Feast of Vultures:
The Hidden Business of Democracy in India, published by Harper Collins
India. Joseph is an award winning investigative journalist.
--
Peace Is Doable
--
You received this message because you are subscribed to the Google Groups
"Green Youth Movement" group.
To unsubscribe from this group and stop receiving emails from it, send an email
to [email protected].
To post to this group, send an email to [email protected].
Visit this group at https://groups.google.com/group/greenyouth.
For more options, visit https://groups.google.com/d/optout.
