BLACK MONEY

INDEX I. WHAT IS BLACK MONEY? II. CREATION AND ACCUMULATION OF BLACK MONEY III. HOW THE BLACK MONEY IS STASHED AWAY IN FOREIGN BANKS, ESPECIALLY IN SWISS BANKS? IV. HOW MUCH BLACK MONEY IS STASHED AWAY IN FOREIGN BANKS ESPECIALLY IN SWISS BANKS? V. REPLACEMENT OF FERA (FOREIGN EXCHANGE REGULATION ACT 1973) BY FEMA (FOREIGN EXCHANGE MANAGEMENT ACT 1998). VI. BLACK MONEY IN INDIA - SOME EFFORTS TO UNEARTH IT. VII. PUBLIC INTEREST LITIGATION (PIL) ON BLACK MONEY. VIII. BLACK MONEY IN FOREIGN BANKS-LEGAL POSITION. IX. HOW THE USA COULD GET THE INFORMATION FROM THE SWISS BANKS? X. SOME STEPS TAKEN BY INDIA (UPA GOVERNMENT) AGAINST THE TAX HAVENS. XI BETTER ATMOSPHERE PREVAILING AT PRESENT TO UNEARTH BLACK MONEY. XII. CONCLUSION XIII. SCAMS IN INDIA FROM 1992 TO 2009 BLACK MONEY IN INDIA Black Money issue is not confined to India alone. It has become a worldwide topic in view of the world financial crisis being faced by the world. In India it has become a hot topic as it was raised as an election issue by Bharatiya Janata Party leader L K Advani in the last general elections, 2009 who promised to bring back black money stashed away in foreign banks, if his Party is elected to power. (it is a different matter that he had no such idea when he was Deputy Prime Minister in NDA Govt. during 1998-2004). It is good that a debate is going on in India about the Black Money. Black Money is known by many names, such as illegal money, black economy, tainted money, dirty money, dirty economy, parallel economy, shadow economy, under ground economy, secret wealth, underdog etc I. WHAT IS BLACK MONEY? a) The National Institute of Public Finance defined Black Money as illegal income accrued on account of not showing it to the authorities concerned in order to avoid various taxes, thus violating various Tax Laws. Some times it is called No.2 economy. Thus the Black Money comprises Tax- evaded income and illegal or crime money. Such income may be related to both direct taxes which means Income Tax, Corporate Tax, Capital Gains etc. or indirect Taxes such as Tax on commodities, services etc. This is intended to disappear from any record.

b) Black Money can be divided into two kinds. 1. Black Money in the country of origin i.e. Black Money operating in 2. Black Money in Foreign Banks like Swiss Banks. II . CREATION AND ACCUMULATION OF BLACK MONEY

India.

a) There are many ways to create and accumulate Black Money. One can see it in everyday life. There will be much scope for Black Money in foreign trade. Exporters will export more but can show less in Invoices and in imports also imports may be more and Invoices can be shown for less and they can manage the Customs Authorities and both the exporters and importers can keep the amounts illegally saved in foreign banks. The industrialists, the manufacturers etc. can show less than the products actually produced and they will create Black Money by selling the products which were not shown in the accounts and by managing the departmental officials concerned. Black Money will be created in works-contracts of both State and Central Govts. and similarly in Govt. purchases. Corruption is rampant in Govt. Offices especially in property registration transactions. And corruption means Black Money. In film industry, in Educational Institutions and in real estate business, Black Money will be created. Allegations of corruption are there in purchases of defence equipments, irrespective of the Party in power. In elections irrespective of general or local, selling of seats by political parties and organising defections in political parties have become hot beds of corruption and transfer of Black Money. There are instances of sale and purchase of posts of Ministers. Crime and Terrorist activities can be mentioned as seats of corruption and Black Money creators. Thus any number of instances can be quoted which will help creation and accumulation of Black Money. In one sense Black Money can be ssid to be peoples money stolen from them. Thus Black Money or black market emerges through manipulation of the economic forces of supply and demand for both currency and commodities. It will also emerge when Trade and Industry create an artificial situation of scarcity or glut and amass wealth. Real estate and construction works in some foreign countries such as Gulf Countries also have become the creators of Black Money. As economic activity grows so also the Black Money. The enormous developments in Science and Technology and liberalisation policies of the Govt. helped economic activity and creation of Black Money. Smuggling, drug trafficking also help the creation of Black Money. The main sources of Black Money can be big business, the politicians, the bureaucrats and their supporters. Sometimes even white money is converted in to Black Money. b) Black Money can be of two kinds. Black Money inside the Country and Black Money in overseas. Let us first deal with the position inside our Country. The role and the impact of the Black Money inside the Country cannot be underestimated. Some may say that Black Money has a positive role in the sense that it helps economic growth by stimulating consumption by helping in increasing the purchasing capacity of some people. But the negative impact of Black Money is very much. Black Money has become a parallel economy.

Now a days, it is increasingly realised worldwide that one of the main reasons for the present day world financial crisis is the role of the Black Money worldwide. The same holds good for India also. One estimate is that Black Money available in India, is almost equal to that of white money. So, Black Money is in a position to compete with the white money. So, the Black Money can undermine the economic projections. It can distort and upset the Governments not only economic but also political policies. The govt.s inability to control enormous price rise, resulting in the Central Government blaming the State Governments and vice versa, can be cited as an example, though the Govts. may not agree. Black Money can play a king maker role. Thus Black Money can be a threat to Indian democracy. It can play a role to create confidence in the Govts., or the other way also. c) The Black Money kept overseas can be said to be a Non-Performing Asset (NPA) so far as India is concerned. The money kept secretly in the foreign banks will be useful to that country where it was kept and the secret deposits will get only small interests on the amounts. III. HOW THE BLACK MONEY IS STASHED AWAY IN BANKS, ESPECIALLY IN SWISS BANKS? a) Switzerland is known for Swiss banks where foreigners including indians used to keep their secret illegal black moneys in those banks. Thus Switzerland is known as a TAX HAVEN. A TAX HAVEN IS A COUNTRY WHERE TAXES ARE LEVIED AT A LOW RATE OR SOME TIMES NOT AT ALL. Thus, a Tax haven will not substantially implement International Tax Standards. At present there are about 37 countries that are called Tax Havens or Secret money destinations. Besides Switzerland some of them are Andorra, Anguilla, Antigua and Barbuda, Aruba, Austria, Belize, Bahamas, Bermuda, British Virgin Islands, Cayman Island, Costa Rica, Cook Islands, Cyprus, Dominica, Gibraltar, Greneda, Honkong Liechtenstein, Mauritius, Marshal Island, Monaco, Montserrat, Malaysia, Philippines, Nauru, Antilles, Singapore, Uruguay. What is Tax Haven: Tax Havens impose nill or only nominal taxes. They are used by non-residents to escape high taxes in their country of residence. Tax Havens have laws which protect businesses from the scrutiny of Foreign Tax Officials and authorities. A Lack of transparency in the operation of the legislative, legal or administrative provisions is another factor used to identify Tax Havens.

b). Now we shall deal with Swiss banks. There are 410 banks and security dealers in Switzerland. The main banks are UBSag and credit Suisse.(by the merger of union bank of Switzerland, which was established in 1862 and Swiss Bank Corporation, which was opened in 1872, UBSag was established in 1998). These two banks are having half of the total deposits. These two banks have world wide network. They have branches in many cities such as London, Tokyo, Hong Kong, New York, Washington etc., and in many international centers. Besides these two, there is one Swiss National Bank and many private banks in Switzerland. One (Non-

Citizen) need not be Millionaire to open accounts in these banks. With a mere 5000 Swiss Francs, one can open an account. One need not have minimum balance to continue the bank account. They ask for no Income Tax from non-citizens and they ask no questions about their money. The bank account can be closed at any time. The bank account will not be in the name of the individual but with numbers only. The account holder can meet the banker and can know where his money was invested. As the accounts will be in numbers only, the names will be known only to the bank manager or one or two individuals. Thus, secrecy will be maintained. c) Switzerland could maintain its neutrality in the first and the second World Wars. It joined the UNO only in 2002. It is also known for its political and economic stability. In 1934 itself Swiss Parliament passed a Banking Law, giving secrecy of bank accounts top priority. Tax evasion though illegal, is not considered a criminality. But Switzerland considers Tax evasion to be a minor matter and can prosecute employees of any Bank giving information about individuals indulging in Tax evasion. Switzerland made secrecy a fundamental right. The value of Swiss currency Franc used to be stable. The GDP (Gross Domestic Product) of Switzerland used to be much higher when compared to most of the other foreign countries. All these factors helped Switzerland to be a Tax Haven. The Swiss Financial Market Supervisory Authority, a legally constituted body used to coordinate and control more than 400 Banks in that country. In 1993, an institution known as Banking Ombudsman was created by the Swiss bankers association to help the customers and to attend to their grievances and to settle the disputes between the customers and the banks or between the banks. Bank of International Settlements to whom all Central Banks in the world are affiliated is seated in Basel city in Switzerland, which is a small country with an area of 41293 sq km and population of 7.2 million (area of Guntur dist 11400 sq km and population of 2.4 million. Four times the Guntur Dist). GDP $260.7 billion (Indias GDP $510.2 billion) GDP per head is$ 37150 (Indias is $ 490). d) Not only in Switzerland but in most of the Tax Havens, it will be very difficult to trace out the origin of the money because of the methods they adopt. Money from criminal activities may be routed to these bank accounts via Shell companies or dummy companies - money l aundering. Money may be transferred from one account to the other and the previous account is closed so that it becomes very difficult to trace out where the money is originated from. Bankers themselves will facilitate such activity by legal firms and chartered accountants operating in Tax Havens. Money is sent from one Shell company in one Tax Haven to another in a different Tax Haven. Major Banks will facilitate such activities by maintaining hundreds of companies in Tax Havens. IV. HOW MUCH BLACK MONEY IS STASHED AWAY IN FOREIGN BANKS, ESPECIALLY SWISS BANKS? a) The Organisation for Economic Cooperation and Development (OECD), an organisation of developed countries has estimated that about $11 Trillion(one trillion means one million million, means 1 followed by 12 zeros) more than 10 times the amount committed by G-20 Countries to revive the world economic crisis, was stashed in Tax Havens

b) A report by Global Financial Integrity (GFI), a think tank located in Washington DC that promotes national and multilateral policies, safeguards and agreements aimed at curtailing illicit financial flows and enhancing global development and security, says that the top five countries having money in Swiss Banks are : India - $1456 Billion Ukraine - $ 109Billion Russia - $ 470 Billion and China - $ 96Billion UK - $ 390 Billion In 2006, the Swiss Banks association released a white paper which tallies with the above estimates. The report also said that during 2002 to 2006 the total illicit financial out flows from india averaged from a low of $ 22.7 Billions to a high of $ 27.3 billion per year. The report further says 1 Trillion to 1.6 Trillion of illicit money moves yearly across the borders and half of it comes out of developing and transitional economies. Asia was the dominant in overall illicit financial flows from developing countries. Europe ranks second with 17%, while the Middle East and North America (MENA) with 15%. Similarly the Western Hemispheric countries account for another 15% while African Nations share will be about 3%. Global Financial Integrity (GFI) Research Report: In Dec 2008, Global Financial Integrity (GFI) published a Research Report titled Illicit Financial Flows from developing countries : 2002-2006 which estimated total illicit capital flight from developing countries to be as high as $ one trillion per year. The report is based on analysis and employs two main models of estimating illicit financial outflows from developing countries based on the World Bank Residual (based on Change in External Debts or CED) and The Trade mis-pricing (based on the Gross Excluding Reversals or GER) methods. During the period 2002 to 2006, total illicit financial outflows from India averaged from a low of $ 22.7 Billion to a high of $ 27.3 Billion per year. The report is based on Examination of Trade and External Debt Data from 2002-06 maintained by the International Monetary Fund and the World Bank. The report does not link illicit financial flows with the underlying activities (whether legal or illegal) that generated the capital to be transferred abroad. This $ one trillion or more a year and the structure that facilitated its movements is not the only biggest loophole in the GlobalFree market system. It is also the most damaging economic condition, affecting developing and transitional economies. It drains hard currency reserves, heightens inflation, reduces tax collection, worsens income gaps, cancels investments, hurts competition and undermines trade. It leads to shortened lives for millions of people and deprived existences for billions more. Within the economic realm as distinguishable from political affairs or environmental constraints, nothing else approaches the harmful effects of massive outflows of illicit money from poor countries to rich countries. Of the $ one trillion to $1.6 trillion of illicit money estimated to be moving yearly across borders, half of it - $ 500 to $ 800 billion a year comes out of developing and transitional economies. These are countries that often have weak legal and administrative structures.

c) Global watchers of the Indian economy estimate that Indias wealth safely kept in Tax Havens will be around $1.5 Trillions. This estimate is supported by Tax Justice Network, an organisation working towards fair tax treatment to all. The Indian Institute of Finances based in Bangalore, in a study indicated that 56% of the Black Money stashed in Swiss Banks belongs to Indians. The Black Money stashed between 1946-2008 will be Rs. 70 lac crores. Various political parties and other groups have been claiming that the Black Money stashed away in Swiss Banks by Indians exceeds $1Trillion. These are only estimates. But the correct figures can be given by Swiss authorities only. But there seems to be an agreement that Rs. 70 lac crores are in Swiss Banks which belong to Indians. But it is a matter of record that approximately 80000 Indians travel to Switzerland every year and nearly 25000 of them go there frequently. India is said to be the 83rd most corrupt country in the world. Bribes have become a part of daily life. The bureaucracy which is said to be the steel frame of governance has become the steal frame. The fact that worries everybody is corruption has engulfed the respected Fourth Estate. We are hearing about "Paid News", "Yellow Journalism" etc. It is disturbing to note that media (both electronic and print) in Andhra Pradesh made Rs. 350 crores by publishing Paid News during General Elections in 2009, with Telegu Language News Papers ruling roost. d) How the Black Money can be utilized: The Black Money estimated to be stashed away in foreign banks will be Rs. 70 lac crores($1400 Billion ). It is 14 times bigger than Indian annual budget. With a part of it, Indias external debt of $ 220 Billion could be cleared. India can become an economic super power. If so $ 1 will be available per Rs 10 or Rs. 15 instead of present Rs. 50 or so. Indias internal infrastructure could be developed and poverty in India could be removed. Thus India could do wonders if all the secret monies are brought back. Every poor man in India could get 1lac rupees, if it is distributed e) Black money holders in the world A popular magazine of Switzerland, SCHWETZER ILLUSTRIRTE (in Germany) dated 11.11.1991, under the heading curse of money-the Swiss Bank accounts of the dictators disclosed the names of the following politicians of the developing world with stashed Black Money in the Swiss banks with the amounts they deposited. Name of the Politician & country Amount stashed in Swiss Banks in Francs 1. Idi Amin, Ruler of Uganda 1 million 2. Anastaslo Somoza, Ruler of Nicaragua 750 million 3. Jean Claude Duvallar President of Haiti. 15 million 4. Manual Noriega, President of Panama 6 million 5. Suke Mobutu, Ruler of Zaire 600 million 6. Nicholas Sesusacu,Ruler of Romania 600 million 7. Halley Solassee, Ruler of Ethiopia 225 million 8. Abu Nidal, Ruler of Palbastinanse 1 million 9. Jaafar Numeiri, Ruler of Sudan 34 million 10. Suharto, Ruler of Indonesia 25.5 million

11. 12. 13. 14.

Saddam Hessian, Ruler of Iraq Jean B Bole, Ruler of Zontralafrica Rajiv Gandhi, Ruler of India Riz Pahlavi, Ruler of Iran

700-800 million 2.8 million 2.8 million 6.7 million

f) Another report published in Deccan Chronicle dtd 26 Feb 2010, mentioned the following 34 names who are alleged to have hided their wealth in Switzerland and other Tax Havens such as Monaco, Liechtenstein, Austria etc. The history of laundered money parked in secret Bank Accounts dates back to 79 years, when American gangster, Alphonse Gabriel "Al Capone" was found stashing his illicit money in secret Bank Accounts. The list includes the following names and countries. 1. Asif Ali Jardari, present President of Pakistan, 2.Joseph Estrada, former President, Phillippines, 3.Ferdinand Marcos, former President Phillippines, 4.Genl Abacha of Nigeria, 5. Genl. Noriega, former President of Panama, 6. Yasir Arafat, Late Palestian Leader, 7. Carlos Salinas de Gortari, former President of Mexico, 8. Helmutt Kohl, former German Chancellor, 9. Benazir Bhutto, former Pakistan PM, 10. Jacques Chirac, former President of France, 11. Fujimori, former President of Peru, 12. Augusto Pinochet, former dictator of Chile, 13. Charless Taylor, former President of Liberia, 14. Seymour Arthur, former PM of Barbados, 15. Pavel Lazarenko, former PM of Ukraine, 16. Alfonso Portillo, Ex President of Guatemala, 17. Chen Shui Bian, former President of Taiwan, 18. Basdeo Panday, former PM of Trinidad Tobago, 19. Jean Claude Duvalier, former President of Haiti, 20. Moussa Traorem, former Dictator of Mali, 21. Saddam Hussain of Iraq, 22. Col. Gaddafi, President of Libia, 23. Sese Seke Mobutu former President of Congo, 24. Lansana Conte, former President of Guinea, 25. Gnassingbe Eyadema, former President of Togo, 26. Daniel Arap Moi, former President of Kenya, 27. Omar Bongo, former President of Gabon, 28. Obiang Nguema, Ex President of Equatorial Guinea, 29. Blaise Compore, President of Burkinafaso, 30. Denis Sassou Nguesso, President of Congo, 31. Aduardo dos Santos, President of Angola, 32. Hosni Mubarak, President of Egypt, 33. Yoweri Museveni, President of Uganda, 34. Ibrahim Babangida, former dictator of Nigeria. While a few of these above mentioned world leaders have already been convicted, others are either under trial or have somehow managed to get away with these allegations. V. REPLACEMENT OF FERA (FOREIGN EXCHANGE REGULATION ACT 1973) BY FEMA (FOREIGN EXCHANGE MANAGEMENT ACT 1998). The NDA government leaders like L K Advani, who now raises the issue of Black Money , while he was in power, helped the Black Money to be stashed away by replacing FERA by FEMA. This was headed by the NDA government by A B Vajpayee when Yashwanth Sinha was the Finance Minister. This measure was opposed by the then Congress Party. But Sri Arun Shourie of NDA recalled in an article published in India Express of 23.4.2009 that The Bills Act 1998 (both the Bills were introduced in the Lok Sabha by the NDA Finance Minister Yashwant Sinha on the same day) were broadly on the lines of a draft prepared under the leadership of

the Finance Minister P. Chidambaram. It goes to show that the views of both BJP and the Congress about the Black Money are the same. So one has to see what is the connection between Black Money and FEMA and PMLA. In the same article Arun Shourie while justifying the replacement of FERA by FEMA assigned the following: 1. The demand for doing away with the harsh provisions in FERA, came to a crescendo during the government of the V P Singh when FERA came to be used for interrogating captains of industry like Sri Kirloskar under harsh circumstances (in connection with a case involving Black Money) 2. Like many well - Intentioned Laws FERA paved the way for disaster. FERA created a flourishing Black Market in foreign exchange. 3. It brought into the economic lexicon, the word "Hawala" - illegal foreign exchange transaction became the fuel for the growth of crime syndicates with trans-border connections. 4. FERA also became a tool of oppression. Successor Governments persisted the FERA and added COFEPOSA (Conservation of Foreign Exchange and Prevention of Smuggling Act). 5. International markets do not respect draconian laws. Mercilessly FERA was buried finally on 11-5-2000. At this juncture it will be useful to know the difference between FERA and FEMA (Foreign Exchange Management Act 1998) and also about the PMLA (Prevention of Money Laundering Act 1998) and the background in which they were brought up. These two bills were unofficially circulated in 1997 itself among the big business and industrialists. It was discussed thoroughly by them and their views were taken in to consideration and necessary changes were made and 1998 FEMA bill was finalized and was introduced in the Parliament. The big business bitterly opposed the PMLA and after certain changes to the original bill, this was also introduced in the Parliament. The left parties criticized that the Government succumbed to the pressure of the big business and the bills were prepared to the satisfaction of the big business. It is pertinent to know the differences between the FERA and FEMA. Foreign Exchange is important for any country for foreign trade, imports and exports and other foreign payments. Foreign exchange reserves were very limited in 1970s. The necessity to have control over it was felt necessary and FERA was passed. It will be useful to recall three aspects of sanctions or controls imposed by FERA. i) All foreign exchange dealings like payments for imports and receipts for exports shall be done only through the Central Government appointed dealer viz. the Reserve Bank of India. ii) Nobody should keep even a small amount of foreign exchange with him or her privately and every thing should be deposited with the RBI. iii) All the dealings with India in foreign countries including the transactions in Rupees are subjected to controls. Only RBI has got the powers to relax the above controls. Every violation of FERA is liable to punishment. Some violations attract even jail sentences.Thus Hawala scams are also punishable with imprisonment. But between 1973-1998, one can find a lot of changes in Central Governments economic, financial, trade and foreign exchange especially LPG (Liberalization, Privatization and Globalization) policies. Lot of opportunities came for FDIs in India and Indian investments in foreign countries. One will find lot of improvement in foreign exchange reserves. The aim of

FEMA was to bring out the necessary changes in the foreign exchange regulations in order to facilitate the country's economic developments and enhance foreign reserves and its market. FEMA provides for two categories of foreign exchange dealings which were not there in FERA. i) Current Account transactions and ii) Capital Account transactions. For the first category Viz. Current Account transactions one need not take prior permission from the RBI, before payments. Payments of Foreign Exchange Foreign trade, current business, services, payment of interests for short term loans, expenses of parents, spouses, children living in foreign countries fall under this category. One can utilize the foreign exchange freely. Under FERA one can not spend even a dollar without prior permission of RBI. Similarly all the dealings of Indians residing in India relating to sale, purchase, exchange of properties, monies in foreign countries and the dealings of Indians living in foreign countries relating to their properties, monies in India and dealings between Indians in India and Indians living in foreign countries also come under this category. No jail sentences for any sort of FEMA violations. One can appreciate that lot of difference is there between FERA and FEMA. It is also necessary to acquaint about the PMLA (Prevention of Money Laundering Act 1998), which was introduced in Parliament along with FEMA. PMLA has nothing to do with foreign exchange. Some supporters of the big business used to say that the penal provisions which were not there in FEMA are introduced in PMLA, which is not correct on the face of it. Actually PMLA relates to Black Money. It was estimated that by 31-03-1998, the Black Money in India was equivalent to 1/4th of the GDP (Gross Domestic Product) which may come to roughly Rs. 3,11,887 crores. PMLA was brought about with a view to unearth and seize Black Money. India was a participant in the summit of 185 countries held in New York during 8-10 June, 1998 on Drugs under the auspicious of UNO as Narcotic Drugs. Money laundering was defined in Sec. 3 of the PMLA. The money or property illegally earned and illegally kept in India or outside, all dealings of change, exchange, transfer, alienation etc and all sorts of dealings, direct or indirect relating to such monies or properties come under money laundering. Thus it has nothing to do with foreign exchange. VI. BLACK MONEY IN INDIA - SOME EFFORTS TO UNEARTH IT. Black Money in India, (not money stashed away in foreign banks) including in Indian banks in the benami names is estimated to be Rs. 25 lac crores. Some attempts (some describe them as an eye wash) were made to unearth it . a) The Janata Government headed by Morarji Desai in 1977withdrew Rs.1000 and above denomination currency notes from circulation. But the NDA government headed by A B Vajpayee, observing that the action was not helpful to achieve its objective, repealed the earlier orders and again brought the above currency in to circulation. b) Various incentive schemes were announced to achieve the object of unearthing Black Money in India. In 1992, a scheme to attract the Black Money holders was announced. If the Black Money is deposited in National Housing Bank, the depositor can withdraw 60% of the Black Money which automatically will be a white money. Only 40% will go to the Government. But there was a little response. In 1997, the then Central Government (P.Chidambaram as

Finance Minister) introduced a Tax Amnesty Scheme which was known as Voluntary Disclosure of Income Scheme (VDIS). Under this scheme, the Government will not ask about the details of the source of income or whether taxes were paid or not and the Black Money holders, if it is an individual, he or she can pay 30% as tax and the rest can be kept as their own as white money. The same principle applies even for the companies but it has to pay 35% instead of 30%. No civil or criminal action will be taken against the Black Money holders. But the scheme fetched only Rs10000 crores. VII. PUBLIC INTEREST LITIGATION (PIL) ON BLACK MONEY Former Union Law Minister in NDA Government and a leading advocate Ram Jeth Malani and five others including former DGP of Punjab K P S Gill, former Secretary General of Lok Sabha Subhash Kashyap, poet Sharmanand and his wife filed a PIL(Public Interest Litigation) in Supreme Court for a direction to the Government of India to bring back Rs. 70,00,000 crores illegally hoarded in Swiss and other foreign banks, particularly the UBS Bank and freezing of accounts of Indian business men, politicians and other influential persons holding their assets there. In their petition, they have alleged that the UPA Government was protecting those, who have committed dacoity and have stashed away huge amounts of public money in Swiss Banks defrauding the National Exchequer of a huge amount of tax. The affidavit filed by the Director of the Department of Revenue, Priya V K Singh, on 2-5-09 opposing the PIL said that it was politically motivated (it is filed when the General Elections were going on) that there are no authentic figures for the amount of monies lying in those Bank Accounts, that the Central Govt. was constantly alive to the need to be able to retrieve information and that initiatives have been taken by Prime Minister Man Mohan Singh during the G-20 Summit in London. This is not a case for judicial review as the petition pertained to policy, regulation, economic affairs, international cooperation and political leadership. The affidavit further said that under a Double Taxation Avoidance Agreement (DTAA) India had with the Swiss confederation, information could be exchanged but Swiss Government is not under any obligation to carry out administrative measures at variance with their regulations or supply particulars not procurable under their legislation, though in the past the competent Swiss authority consistently refused to share bank particulars on the ground that information on deposits of Indian residents was not necessary for the application of DTAA but was required only for the enforcement of Indian internal Tax laws and that such information was not at its disposal under Swiss laws in the normal course of Tax administration. The affidavit further said that the Government of India has already approached the Swiss Government seeking renegotiations of articles for an exchange of information under the DTAA. b) In their reply and rejoinder, the petitioners denied any political motive and the case was adjourned and is in pending.

VIII. BLACK MONEY IN FOREIGN BANKS-LEGAL POSITION a) The issue of money in Tax Haven was raised for the first time in 2009 elections. L K Advani leader of the opposition in Lok Sabha and leading figure in the Bharatiya Janata Party publicly stated that if he is elected to the Government he will get back the Black Money stashed in Swiss Banks. Not only that, the Election Manifesto of BJP also said that unaccounted money kept by Indians in Tax Havens abroad will be up to $ 1.5 trillion and they will take determined steps to bring back the money. Similarly the CPI (M) and CPI Election manifestoes were also in line on this issue. It is to be noted that the election manifesto of the ruling Congress Party does not make any mention of the issue of money in Tax Havens. It is good that this issue was raised by the BJP even though the issue of Black Money in Swiss Banks was in the public mind after the Bofors case, SDW sub marine case, Jain Hawala case, Oil for food scam etc., and even though the BJP was in power and L K Advani was the Deputy Prime Minister during NDA Government from 1998 2003. It is also to be noted that by the time the BJP raised the issue it was the hot topic through out the world and the Governments in USA, Germany, U K and France which were experiencing bad taste of world financial crisis, individually and jointly have taken certain steps to unearth the Black Money in Tax Havens. b) Before taking up various initiatives it will be useful to discuss the legal position obtaining in Switzerland to tackle the Swiss Banks and also the method used by the USA to seek the secret information about the names of the depositors from the USA in the Swiss Banks c) Before approaching the Swiss Government for information regarding the Black Money account or accounts of any individual, that country for example India should investigate in to the illegal acts (violation of Tax Laws etc.) committed by that individual. The investigation should conclude that individual has committed or organized such illegal acts from his own country. IX. HOW THE USA COULD GET THE INFORMATION FROM THE SWISS BANKS? Switzerland told the Indian authorities that it could not give information about the names and the accounts of Indians holding secret Bank Accounts in its Banks. In the beginning, they told USA also the same thing. But the largest, Swiss Bank UBS has given in February 2009 the names of 250 persons holding the secret accounts and later agreed to give about 4500 names of US citizens holding the secret accounts. Why the Swiss authorities agreed? This will be very interesting. Though the US is the most powerful country in the world, the Swiss authorities refused to cooperate in the beginning. The US, which was facing financial crisis, began to take desperate steps to unearth the secret accounts in the Swiss Banks. The IRS (Inland Revenue Services, the US Tax Department) established a programme known as Qualified Intermediatory (QI) Programme. It requested the foreign Banks working in the US to get various forms to be filled up by their clients (US citizens) to show their incomes and they have to file them with the IRS. To overcome this difficulty, the Swiss Banks found ways of hiding the identity of the true

owners of accounts with them through shell companies in other Tax Havens. There are some private bankers like Broadly Birkenfield in the US acting on behalf of Swiss Banks. He used to serve the clients of the Swiss Banks in the US. The activities of the private banks were illegal as he was encouraging the clients to violate US Tax Laws. The IRS prosecuted private banker Broadly Birkenfield in a court who accepted that he was serving clients of the Swiss Bank including the UBS in the US. The court also found that the private banker accepted helping a real estate developer evade $ 7.2 million in Tax and hiding assets worth $200 million. It came to light that Birkenfield was one of the many private bankers used by the Swiss and others to get business from wealthy US clients. As the UBS name gripped up, the US Government took the next step of charging a top UBS executive who helped 20000 US individuals hide $ 20 Billion from the US Government. As the case progressed, the entire UBS Bank was threatened with indictment. Then the UBS came to terms with the US authorities in February 2009. It agreed not only to reveal the names of 200 to 300 US citizens holding secret accounts but also to pay $ 780 Millions as compensation. The US next filed a case to get about 52000 names of US citizens who are believed to have accounts in UBS. The UBS tried every trick again not to reveal the names. The Swiss Government even threatened that the coercive steps will disrupt the diplomatic relations and threatened that it will destabilize the world financial system and said that revealing of names would violate the Swiss Criminal Law. The US Government announced a Voluntary Discloser Scheme which allowed people with illegal accounts abroad to come clean by paying the taxes and accepting light penalty. But the judge went to the extent of asking the US Government whether it was willing to seize the assets of UBS. Ultimately the UBS again came to terms with the US Government and agreed to give the name of around 4500. In the US, the IRS was proceeding with the prosecution of some other private bankers and more and more data was coming out. In Florida, some private bankers Schumchai and Rickenbach were indicted in August 2009. The Black Money in the US may be larger in absolute terms when compared to Indias Black Money. As a per capita of GDP in US, it is only 5% but in India it will be about 50%. So more problems for India if proper steps are not taken to unearth the Black Money stashed abroad and bring back it. X. SOME STEPS TAKEN BY INDIA (UPA GOVERNMENT) AGAINST THE TAX HAVENS a) Union Finance Minister Pranab Mukharjee on 14-07-09 informed Rajya Sabha that till now the Central Government never undertook the task of studying how much Black Money was there inside and outside India in foreign banks, though some private individuals and organizations have given some estimates about that and there are variances. But the finance minister promised to take action to prevent creation of Black Money. He also told Rajya Sabha that there are two ways before the Government, to unearth the Black Money: one way is to find out the Black Money and confiscate, the other route is for the Income Tax Dept., to gather the details of the Black Money through the computerized system. He also informed that till recently Swiss Banks adopted the policy of not revealing any name of secret accounts in their

Banks but there is some change (relaxation) in their policy due to world financial crisis and also on account of pressure by OECD Countries. But the relaxation relates only to the Double Taxation Avoidance Agreement. Such agreements are there at least among 76 countries. Telling about Black Money passing through the route of Mauritius, he as external affairs Minister in the last UPA Government started taking some action to prevent it. b) Mauritius and India have a Double Tax Avoidance Treaty. It is reported that the FDI (Foreign Direct Investment ) flows from Mauritius stood at Rs.204604 crores (4525 Billion US $) from April 2002 November 2009 period accounting for 44% of the Rs. 4,86,480 crores FDI inflows in to India during this period. The other big investors included Singapore, the US, Britain and the Netherlands. While investors got higher returns on their money in India, those from Mauritius get even higher returns on their capital as we have a Double Taxation Avoidance Treaty said Dr. D K Joshi, the Principal Economist of CRISIL. Of late the Government has reportedly found many cases of misuse of DTAT with Mauritius including round-tripping and is working towards revising the treaty to prevent its further abuse by companies, domestic or foreign. But Mauritius Vice Prime Minister Ramakrishna Sithanan recently said that he had not received any complaints from New Delhi about routing investments via his country to evade taxes. Roundtripping is referred to as routing of domestic investments through Mauritius to take advantage of the DTAT to pay lower taxes on profits. c) Indian Prime Minister Dr.Man Mohan Singh met his British counterpart Gordon Brown on 01-04-09 in London, before G-20 Summit and called for an International Agreement on the transparent exchange of information in banking and the need to deal with the Tax Havens and countries that maintain banking secrecy. In his view the lack of information about money flows made dealings X. SOME STEPS TAKEN BY INDIA (UPA GOVERNMENT) AGAINST THE TAX HAVENS a) Union Finance Minister Pranab Mukharjee on 14-07-09 informed Rajya Sabha that till now the Central Government never undertook the task of studying how much Black Money was there inside and outside India in foreign banks, though some private individuals and organizations have given some estimates about that and there are variances. But the finance minister promised to take action to prevent creation of Black Money. He also told Rajya Sabha that there are two ways before the Government, to unearth the Black Money: one way is to find out the Black Money and confiscate, the other route is for the Income Tax Dept., to gather the details of the Black Money through the computerized system. He also informed that till recently Swiss Banks adopted the policy of not revealing any name of secret accounts in their Banks but there is some change (relaxation) in their policy due to world financial crisis and also on account of pressure by OECD Countries. But the relaxation relates only to the Double Taxation Avoidance Agreement. Such agreements are there at least among 76 countries. Telling about Black Money passing through the route of Mauritius, he as external affairs Minister in the last UPA Government started taking some action to prevent it.

b) Mauritius and India have a Double Tax Avoidance Treaty. It is reported that the FDI (Foreign Direct Investment ) flows from Mauritius stood at Rs.204604 crores (4525 Billion US $) from April 2002 November 2009 period accounting for 44% of the Rs. 4,86,480 crores FDI inflows in to India during this period. The other big investors included Singapore, the US, Britain and the Netherlands. While investors got higher returns on their money in India, those from Mauritius get even higher returns on their capital as we have a Double Taxation Avoidance Treaty said Dr. D K Joshi, the Principal Economist of CRISIL. Of late the Government has reportedly found many cases of misuse of DTAT with Mauritius including round-tripping and is working towards revising the treaty to prevent its further abuse by companies, domestic or foreign. But Mauritius Vice Prime Minister Ramakrishna Sithanan recently said that he had not received any complaints from New Delhi about routing investments via his country to evade taxes. Roundtripping is referred to as routing of domestic investments through Mauritius to take advantage of the DTAT to pay lower taxes on profits. c) Indian Prime Minister Dr.Man Mohan Singh met his British counterpart Gordon Brown on 01-04-09 in London, before G-20 Summit and called for an International Agreement on the transparent exchange of information in banking and the need to deal with the Tax Havens and countries that maintain banking secrecy. In his view the lack of information about money flows made dealings with the financial crisis difficult. Thus the question of banking jurisdiction that refuse to provide information has come to the fore as one of the issues in the G-20 Summit. d) After G-20 Summit, leaders announced a plan to impose sanctions against Tax Havens. The OECD, which is a grouping of developed countries, released the list of black listed countries. This development gave India helping hand in tacking the problem of Black Money. There are allegations that India was not active like Germany, France, UK, US in unearthing Black Money abroad as itself officially permitted it through Mauritius route and also through Participatory Notes (P Notes) and they also allege that that was why there was an uproar in powerful circles when there was a curb put on P Notes by the SEBI (Securities and Exchange Board of India). e) Meanwhile the BJP appointed Task Force on Black Money came out with many suggestions. It suggested Voluntary Disclosure of Black Money Schemes. The depositors of Black Money should be given six months' for disclosure of the information and the Govt should collect Tax on it and they should be given amnesty. This was bitterly opposed by the Left Parties. f) When India approached the Swiss Authorities for information about the secret accounts of the Indians in August, 2009, the reply was: Swiss Laws and even OECDs Model Tax Convention do not permit fishing expedition. In other words, the indiscriminate trawling through Bank Accounts in the hope of finding something interesting. This means that India cannot simply throw its telephone book at Switzerland and ask if any of their people have a bank account here said a top official at Swiss Bankers' Association (SBA) at Basel, Switzerland. But the SBAs Head of International Communications, James Nason clarified that the key for the exchange of information in tax matters is the Double Taxation Avoidance Agreement between Switzerland and India. Switzerland provides international legal assistance in criminal cases and in tax

matters and any country may lodge a request for such assistance through the official channels. Then asked how the USA was supplied with the information, Mr Nason clarified The basic principles remain intact even following the recent agreement with the USA and the privacy of bank accounts, innocent of any wrong doings, remains protected and the privacy remains the natural state of affairs. No one not even the Swiss Tax Authorities has an automatic right of forced entry into a clients bank account without first satisfying the requirements and conditions stipulated by Swiss Law. Pranab Mukherjee, Union Finance Minister immediately responded by telling the Swiss Banks on 24-08-2009 that his Govt. was not interested in fishing expedition for details of the money stashed with them but will work on specific cases. Immediately the left parties criticized the double standards, of the Swiss Banks. When the US can get the list of persons who have illegally stashed money in Swiss Banks, why not the Indian Government ? and asked the Indian Govt. to take necessary steps. The BJP asked India to mount diplomatic pressure on Switzerland. There were demands not only by political parties, but by some NGOs and intellectuals, by way of round tables etc., to unearth the Black Money. Prof.R.Vaidyanathan of IIM (Indian Institute of Management) Bangalore, while delivering a Nani Palkiwala memorial lecture on Tax Havens and the illegal wealth of India in Chennai on 29-8-09 demanded not to retrieve the frozen wealth and the Swiss Banks should be the top priority of the Govt. g) The Finance Minister said on 31.08.09 that India will begin in December, 09 its first round of consultations with the Swiss Govt., on the tracing Black Money stashed by Indians in Swiss Banks to evolve a legal system that could be evolved through an amendment to the Double Taxation Avoidance Treaty with Switzerland to incorporate disclosure clause to force Swiss Banks to share information about account holders suspected of parking illegal money, on the model of the agreements reached with OECD countries. But the Communist Party of India urged the Govt., to desist from its moves to opt for double taxation system as the system was proved ineffective in countries where it was operational. It is to be noted that India has such Double Taxation Avoidance Treaties with 77 countries including Switzerland. The Swiss Govt. hoped that the new DTAT will help India to trace Black Money and it will be finalized by 2010. The new treaty will be evolved by renegotiating the treaty which was signed in 1995. On claims made by various political parties in India and also by India and foreign think tanks that the Black Money stashed in Swiss Banks by Indians exceeding one Trillion Dollars, the Swiss Banks have asserted that there was no truth in the claims and no black money statistics exist. h) By the end of Sept. 09 Switzerland has inked Double Taxation Avoidance Agreements with 12 countries, containing a clause on extended administrative assistance in the matter and such agreements will be signed with some other countries of OECD so that its name can be removed from the grey list of OECD secretariat. These countries include US, UK, France, Denmark, Luxemburg, Norway, Austria, Mexico, Finland, Spain, Islands, Qatar. On 27-09-09 the SBA (Swiss Bankers' Association) gave the following figures about the foreign Swiss Money. 2237 Billion Swiss Francs (over Rs. 1,00,00,000 crores) assets were held on behalf of foreign clients as on June, 09 which represents 56% of all funds holding in Swiss Banks. Out of the above, 694 Billion Swiss Francs over Rs 30,00,000 crores were held in the foreign private clients. But they did not give out the details of the assets held by the Indians. They also mooted a new idea. As

an alternative to the information exchange Swiss Banks have mooted the idea of a universal withholding tax-wherein they would tax the earnings generated from the wealth of foreigners deposited with them and transfer the proceeds to the Govt. of the country concerned. They are discussing the same with the relevant authorities. India has determined to renegotiate Double Tax Avoidance Agreement signed with 77 countries in order to unearth the Black Money. i) Accordingly India started renegotiations for bilateral Tax Treaty with Swiss Bank Association and other authorities. SBA Spokes person James Nasen said on 21-02-2010 that any country seeking secret account details must be specific with names of individuals and the Bank involved. New treaty with India would be based on OECDs Model Tax Convention. Thus Swiss Banks agreed to give stash information in the back drop of the re-negotiations to revise the bilateral Double Taxation Avoidance Agreement (DTAA). XI. BETTER ATMOSPHERE PREVAILING AT PRESENT TO UNEARTH BLACK MONEY a) Though there are many Tax Havens in the world, Switzerland is the most important one. It can be said that Switzerland was a pet of western capitalism. During the Second World War, both Allied and Axis powers, though at war with each other, used to love that neutral small nation, which has been keeping its neutrality since the Napoleon days. Thus for so many tax evaders and for so many countries from the West and East it became a Tax Haven. b) But things have changed. World financial crisis gave a beat not only to the most developed countries such as USA etc., but also to the developing countries such as India. To come out of the financial crisis, every nation, especially the western powers viz., USA, Germany, France, UK are eyeing on Switzerland and the Swiss Banks. The Swiss Banks as well as Swiss Government are not willing to cooperate to reveal the names of the secret bank account holders and Switzerland became a hate object for them. c) Germany first, France next, the USA later and UK as the latest, individually and jointly began to pressurize the Banks and the Government and in fact declared a war against them to get the names of the Black Money account holders. Though both the Banks and Govt.,first refused and dodged to reveal the names, later, after taking many coercive steps, the Swiss govt., and especially the powerful Swiss Bank UBS agreed to give the necessary information regarding clearly 5000 names of the US citizens. d) The Guardian (English daily) wrote on 4-3-2009: The European leaders grew increasingly agitated at how Tax Havens have been fostered secrecy that has contributed to the collapse of the banks world over.It estimated the unaccounted Global wealth in Secret Havens including Switzerland at $13 Trillion. The annual tax evasion on the dirty fund, estimated at $ 235 Billions, which was twice the Global Budget of poor nations. e) Der Spiegal, a German magazine on 3-3-2009 reported that cash strapped Governments around the world see the opportunity to finally put an end to Bank secrecy to access the money

concealed by their nationals. It also added the British Prime Minister Gordon Brown, French President Nicholas Sarkozy and German chancellor Angela Merkel are now joining forces and they have set their sights on Switzerland. The fight against the Swiss Bank was started in 2008 by Germany, when its intelligence bribed an informant in LGP Bank in Liechtenstein and got a CD containing the names of some 1500 tax dodgers and raided half of them who were its citizens. Germany pressed the OECD (Organization of Economic Cooperation and Development) to black list Switzerland, a member of OECD for protecting the tax dodgers. Two thirds of the Swiss population speaks German. f) The European leaders moved the matter at the preparatory meeting of the G-20 Summit in Berlin in February 2009 and started global crusade against the Tax Havens at G-20 Summit in London in April 2009. Even they did not allow Switzerland to present its arguments at the London Summit. g) Spiegel, the German magazine wrote that for generations, the Switzerland held bank secrecy as not negotiable and said that it was no longer so. Swiss Finance Minister said that they would have to compromise. The Swiss Justice and Foreign Minister had hinted that his country might have to stop protecting Tax dodgers. Prime Minister Gordon Brown had a deal with the Swiss Banks on 14-3-2009 in which Swiss Banks agreed to adopt the bank transparency rules of OECD countries. Brown said it was the beginning of the end of bank secrecy. The US is going ahead with a Law to punish Banking secrecy. The British Prime Minister Brown has pleaded for not black-listing Switzerland. h) Leaders of the G-20 economic powers launched a campaign in April 2009 to name and shame Tax Havens and penalize those who fail to tighten tax standards and transparency. Similarly the OECD in April 2009 published a list of Tax Haven countries which fell short of the full compliance with international agreed tax standards. More than a dozen Caribbean countries and Bermuda were on the list. But the Banks in those countries reject the accusations as one-sided whitch-hunt against them. But the Governments have scrambled to get themselves dropped from the damning OECD non compliance list. The Caymans and the British Virgin Islands could get their names deleted from the list in July 2009, after signing at least 12 bilateral tax agreements in line with OECD standards. Bermuda also could achieve this. The other Caribbean countries also followed suit. i) Patrick Odler, head Swiss Bankers Association said we, the banks must introduce a new business model where tax honesty is the goal, when new money is taken in. Thus the Swiss Banks are considering plans to require their foreign clients conform to personal taxation requirements abroad. j) It is to be noted that at the G-20 Summit on 10-11-09, it was agreed that a Tool box of measures would be used to get countries to comply with an exchange of information to end bank secrecy, which has been a foundation of tax evasion.

k) The OECDs update Overview of the OECDs work on countering International Tax Evasion (Nov 2009) highlighted the progress made in its efforts in bringing all OECD countries accepting Exchange of information requiring in accordance with article 26 of the OECD Model Convention . Hong Kong, Macao (both Chinese territories) and Singapore have agreed to bring the necessary legislation to comply with this. Australia, Belgium, Bermuda, British Islands, Switzerland, Luxemburg, Netherlands, Antilles, Cayman Islands and Bahrain are also positive. The EU has also taken certain measures in this regard which included: 1) Introduction of a common consolidated Corporate Tax base for EU business (CCCTB). 2) Treatment of cross border activities among the EU members as similar to domestic activities. 3) simplification of the tax environment and creation of a level-playing field 4) Application of the Home State Taxation approvals 5) Introduction of clear VAT (Value Added Tax) Rules concerning International Services and Financial Services 6) Providing for exemptions among member countries on assertive and reciprocal basis l) The opposition BJP made the issue of Black Money an Election Issue. BJP leader LK Advani owed to bring back the Black Money stashed in Swiss and other foreign banks. The BJP not only made it a point in its Election Manifesto, but appointed a Task Force headed by Prof. R.Vaidyanathan, Prof of Finance at the Indian Institute of Management, Bangalore. L.K.Advani raised the Black Money issue in Parliament in March, 2010 and demanded the Government to publish a White Paper on this issue. m) On account of the Black Money and Fake Currency, our Nation is incurring a loss of Rupees 10 lakh crores annually. The amount of black money is estimated to be Rs. 25 lakh crore or 500 billion US dollors. It will be about 40% of G.D.P. (Gross Domestic Products). Though the actual figures are not available Prof. Arun Kumar of Jawaharlal Nehru University, New Delhi said the amount of black money will be 40% of G.D.P. which is Rs. 61,64,000 crores. If the Black money is converted into white, the tax collection will be Rs. 7.50 lakh crores. XII. CONCLUSION a) There cannot be a second opinion that the Black Money has become a threat to our nation. So, it is essential to identify the individuals and the business organizations etc, who stashed money in foreign banks especially in Swiss Banks, Mauritius etc. and bring back it and to punish them and to prevent such stashing in future. But this is not an easy task as bigwigs will be naturally involved in this Black Money activity and it requires hard decisions and great guts to take action against them. b) There was news that the Central Govt has collected the information about the names and the organizations which stashed away moneys in Swiss Banks about 15 years back as disclosed by a top retired official of the Central Revenue Department. But the various Govts. that ruled this nation for the last 15 years utterly failed in this matter. But BJP top leaders like LK Advani,

who ruled this country as Dy PM and Union Home Minister, who kept quiet while in power, raised this issue during the 2009 General Elections evidently to gain politically, utterly failed. The attitude of the various Congress Govts at the Center also failed to give confidence to the people on this issue, even though this issue has not cropped up suddenly. The ruling Congress Party failed to reject a news item published in a popular Swiss magazine, Schweitzer Illustrierte, dated 11-11-1991 which published the name of Rajiv Gandhi along 13 other world leaders who stashed away Black Money in Swiss Banks. The amount mentioned was 2.5 million Swiss Francs. Even our Supreme Court found fault with the present UPA Govt for its failure to take proper action against one Pune business man Hassan Ali, who was evidently said to have stashed away Black lakhs of dollars in Swiss Banks. c) The Prime Minister Dr. Man Mohan Singh and finance minister Pranab Mukherji,. more than once expressed their commitment to unearth the Black Money stashed in Swiss and other foreign banks. But the proclamations should be followed by action. d) This is the most opportune time as the USA, Germany, France, UK faced with financial crisis and peoples anger have succeeded to get the names of their citizens who stashed away money in foreign banks including Swiss Banks. The USA had initiated the necessary action against some of the culprits. The Swiss Banks cannot avoid or escape now from giving the necessary information about the Indian citizens who deposited secret amounts in their Banks. e) The whole credit will go to the present UPA Govt., if it succeeds on the Black Money issue. If it fails, it has to carry lot of discredit. In the interest of our nation, it is also necessary to tackle another big problem which is threatening our country i.e., the problem of Fake Currency.

XIII SCAMS IN INDIA FROM 1992 TO 2009 A. Details of various scams that took place in India from 1992 . (Total amount involved in the scams Rs.73 lac crores). In 1992 : Harshad Mehta Securities Scam. Money involved Rs.5000 crores 1994 : Sugar Import Scam. Rs.650 crores (Food Minister Kalpanath Rai presided over the import of sugar at a price higher than that of the market, causing a loss of Rs.650 crores.) 1995 : Preferential Allotment Scam. Rs.5000 crores. Yugoslav Dinner Scam. Rs.400 crores. Maghalaya Forest Scam. Rs.300 crores. 1996 : Fertiser Import Scam. Rs.1300 crores, urea Scam. Rs.133 crores, Bihar Fodder Scam. Rs.950 crores. 1997 : Sukh Ram Telecom Scam. Rs.1500 crores, SNC Lavlin Power Project Scam. Rs.374 crores, Bihar Land Scandal. Rs.400 crores, CR Bansali Stock Scam. Rs1200 crores. 1998 : Teak Plantation Swindle. Rs8000 crores. 2001 : UTI Scam. Rs 4800 crores. Dinesh Dalmia Stock Scam. Rs 595 crores, Ketan Parekh Securities Scam. Rs 1250 crores (Ketan Parekh followed Harshad Mehtas foot steps to swindle crores of rupees from banks. Ketan targeted smaller exchanges like the Allahabad Stock Exchange and the Culcutta Stock Exchange. He borrowed Rs 250 crores from Global Trust Bank).

2002 : Sanjay Agarwal Home Trade Scam. Rs 600 crores (He was an accused in the Rs 92 crores Seimens Provident Fund Scam because the CBI failed to charge sheet him in 60 days as required. The CID alleges that Agarwal did not deliver Govt securities against this amount to the NDCCB as promised. Agarwal had surrendered to a court in Nagpur on May 11th after the Scam broke). 2003 : Telgi Stamp Paper Scam Rs 172 crores (The Telgi case is another big Scam that rocked India. The fake stamp paper racket involving Abdul Kareem Telgi was exposed in 2000. The loss is estimated to be Rs 17.33 crores. Between 1992 and 2002, 12 cases were registered against Telgi relating to counterfeit stamps in Maharashtra, but the lack of serious action suggests that the scamster had mastered the technique of corrupting the system.) 2005 : IPO Demat Scam Rs 146 crores. Bihar Flood Relief Scam Rs 17 crores. Scorpene Submarine Scam Rs 18,978 crores ( the three billion dollars Rs 13,000 crores- Scorpene Submarine deal has come under a cloud even as India is scheduled to sign the formal contract with French company Thales. The company is in the midst of a corruption scandal involving sales of weapons.) 2006 : Punjabs city Center Scam Rs 5000 crores. Taj corridor Scam Rs 175 crores (TheTaj Corridor Project proposed to give a face lift to the areas surrounding Agras major monuments along the River Yamuna. Included in the venture was blue print for a swanky shopping mall. The plan was put forward by the Central Pollution Control). 2008 : Hassan Khan Tax Default. Rs 50,000 crores. The Satyam Scam. Rs 10,000 crores. Army Ration Scam Rs 5,000 crores. The 2-G Spectrum Swindle Rs 60,000 crores. State Bank of Saurashtra Scam Rs 95 crores. Illegal moneys in Swiss Banks as estimated in 2008 Rs 71,00,000 crores. 2009 : Jarkhand Medical Equipment Scam Rs 130 crores, Rice Export Scam Rs 2500 crores. Orissa Mines Scam Rs 7000 crores. Madhu Koda Mining Scam Rs 4000 crores ( Madhu Koda has been charged with laundering whopping Rs 4000 crores through Hawala transactions and secret bullion trade ). B. What Rs 73 lack crore scam money can do in India? MAKE : 2.4 crores primary health care centers CREATE : 24.1 lakh Kendriya Vidyalayas at a cost of Rs 3.02 crores each, with 2 sections from class VII to XII. CONSTRUCT : 14.6 crore low cost houses assuming a cost of Rs 56 lac a unit . SET UP: 2,703 coal - based Power Plants of 600 MW each. Each costs Rs 2,700 crores. SUPPLY: 12 lakh CFL bulbs. That is enough light for each of Indias 6 lac villages. SET UP: 14.6 lac of 2 lane high ways. That is a road around Indias perimeter 97 times over. CLEAN - UP: 50 major rivers for the nest 121 years, at Rs 1,200 crores a river every year. LAUNCH : 90 NREGA Style Schemes, each worth roughly Rs 81,111 crores. ANNOUNCE : 121 more loan waiver schemes. All of them worth Rs 60,000 crores. DONATE : Rs 56,000 to every Indian. Even better, give Rs 1.82 lakh to 40 crore Indians living below poverty line. (Courtesy TOI)

BOOKS BY THE AUTHOR NAGESWARA RAO GUDAVALLI

1. 2. 3. 4.

On current issues 1996 (Essays on International, National and Regional problems) 36 Artciles - 132 Pages. On current issues 1998 (Essays on International, National and Regional problems). 31 Artciles - 120 Pages. On current issues 1999 (Essays on International, National and Regional problems).28 Artciles - 148 Pages. On current issues 2000 (Essays on International, National and Regional problems, Regional Economic Groupings). 62 Artciles - 140 Pages.

5. 6. 7. 8. 9.

On elections in U.S.A. - 2000 - 44 pages On World Trade Organisation - 2003. - 36 pages. NATO expansion, consequences - Disintegration of Yugoslovia - 1999 - 24 pages. On India - China And Indo - U.S. Relations - 2005 - 77 pages. On Indo - Pak And Indo - Nepal Relations - 2005 - 97 pages.

10. On Uni - Polar world and on Developments in Iraq and Iran - 2005 - 122 pages. 11. On West Asian Crisis - 2005 - 52 pages. 12. On World Social Forum and Dual Citizenship - 2005 - 46 pages. 13. On U.N.O. and European Union - 2005 - 80 pages. 14. On International Terrorisim - 2005 - 40 pages. 15. Inter - linking of Rivers in India - 2005 - 40 pages. (All the above are in Telugu). 16. 50 + Current International Issues in English - 2008 - 210 pages. 17. On Controversial Seshu - Samudram Project in Telugu - 2008 - 26 pages. 18. The Tibet Controvery and Georgia Russia Conflict and After, 2009 May - 42 pages 19. Global Warming & Climate Change and Arctic Conflict in the Making, 2009 August 44 pages.

20. Racial Attacks on Indian Students in Australia - 36 pages. and US-China or Cina-U.S. Relations - 36 pages. 21. Black Money and Fake Currency, April 2010 - 36 pages. 22. Sea Piracy or Terror on the Seas & Yemen and Terrorism, August 2010 - 28 pages. 23. India and Its Neighbours - January 2011- 9 articles-172 pages
24. Indo-U.S, Indo-Russian and U.S. Russia Relations.