November 01, 2011

While Indian govt fiddles, black money flees Swiss banks

Exclusive: While govt fiddles, black money flees Swiss banks
Published: Thursday, Oct 20, 2011, 9:15 IST
By Pradip R Sagar | Place: New Delhi | Agency: DNA

Billions of black money stashed in Swiss banks would return to India — the idea might just remain wishful thinking.

Investigating agencies have “credible evidence” that several Indians have transferred their money from Switzerland to other countries, which do not have any bilateral agreements for sharing information with India.

Investigators found a flurry of monetary transactions across Swiss accounts that they had been tracking for years. The Income Tax department and the Financial Intelligence Unit (FIU) have been notified of these transactions. A senior FIU officer told DNA that this hurried transfer of funds "appears to have been catalysed by the recent G-20 finance ministers’ summit in Paris, where Switzerland agreed to share information on Indian account holders from the next financial year".

An investigating agency source told DNA that “huge chunks of money have been transferred to Macau, the Isle of Man, New Jersey Island, Cayman Islands and Seychelles — all tax havens”.

The FIU recently came to know of at least 15 Indians who made huge transfers over the past week. Since India does not have any bilateral agreements with these “tax havens”, it would be difficult for investigating agencies to monitor the flow of black money. "Now, it seems like a lost case. The chances of recovering the money are bleak," a finance ministry official said.

All the investigating agencies are trying their best to salvage the situation and find out details about the transactions.

The FIU has already apprised the government. The I-T department will move a file through the ministry of external affairs and write to Swiss authorities, seeking their help in this matter.

Officials are, however, sceptical because the deal at the G-20 summit was that Switzerland would share banking information with India only in the next fiscal. In fact, this too was on the agenda when president Pratibha Patil visited Switzerland earlier this month. But the way things are, investigating agencies are worried that the current flight of capital might never be recovered.

Last week’s G-20 summit of finance ministers and central bank governors saw all participants agreeing with India’s concern over sharing banking and tax-related information. Further discussions on the matter will happen between the heads of states at the G-20 summit, in the first week of November, at Cannes, France.

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