Apparently there is nothing that cannot happen – Mark Twain
Almost every week, in a sort of soap operatic fashion, the country is presented with a saga of corruption in high places. The Twitter timelines go viral, television channels go hyper, put up look-out notices and some even beam the vigilantes’ cavalcade on its way to the event “Live!” Such is the inquisitorial interest—to borrow a phrase used by Pranab Mukherjee during the debate in Parliament last December on black money —that soon mobile companies might want to time their differential tariff for text messages as they do during festivals with the days of the expose. The first information reports exchanged via SMS on Friday morning speculated that the target would be a chief minister, a Cabinet minister or the son of a minister. It wasn’t, could well be a case of ‘call waiting’!
In the latest episode, Team Kejriwal accused a foreign bank of money laundering, top corporate honchos and a Congress MP of stashing away millions in foreign bank accounts, the government of shielding the corrupt and the former finance minister of misleading Parliament. Each of those named on Friday has denied the allegations. As evidence, the team proffered confessions of three of those raided admitting to illicit banking and names that were provided by a ‘source in Congress’. The BJP, a few days back—when at the receiving end—said Kejriwal had taken a ‘supari’ (slang for a hit job) from foreign sources. On Friday, it wanted the Congress to answer the charges raised by Team Kejriwal. The Congress, which was gleeful not long back when the target was the BJP, has rubbished the allegations and declared that Team Kejriwal is simply out to defame people. Conviction, after all, in politics is a matter of convenience. There is no word yet from the government or indeed from the Congress Party as to what its government plans to do. Indeed, it is not clear yet what the government deliberated to do on the previous exposes. It is precisely this kind of hit and miss governance which fuels shoot and scoot activism.
The genesis of the latest expose is located in the CD received by the government in July 2011 from the Government of France with the names of 700 clients with accounts in Switzerland. It is conceivable that many of the account holders had legitimate status; it is also possible that some of them would be cases of money laundering. So the standard approach of “name and shame” is possible only after due diligence. The government informed the Parliament last year that the law will take its own course. In August this year, Minister of State for Finance S Palanimanickam informed five MPs from the Rajya Sabha that “undisclosed income of Rs 565 crore had been detected” and that “taxes amounting to Rs 181 crore had been realised”. The MPs didn’t ask what action had been taken against the account holders and the minister didn’t reveal it either. The inertia in the system to process the cases to a logical conclusion has left the innocent vulnerable and the guilty scot-free.
The problem is that while there is much attention on individual instances, there is scarcely any focus on the institutional failure. Ideally, the government should have processed the cases by now—after all, it is a matter of 700 names and even at the rate of two a day, the ground should have been covered. It should have listed those it found guilty of shady banking or hawala with action being taken. The confessions put up as ‘evidence’ suggest hawala operations. The answers in Parliament reveal tax evasion. Why is the government not coming clean on the details? Was there a violation of FEMA and what action is being pursued? Is the bank guilty of money laundering or not?
The silence of the government on fundamental issues of governance envelops the issue with an air of conspiracy. Worse, matters that demand objective application of the rule of law are now being assessed on subjective political considerations of who is making the allegation against whom. The lack of transparent action against violators is widening the chasm of distrust between the people and the government. The inability of the government to enforce the rule of law renders every allegation believable.
Tax evasion is not new to India. The first Income Tax Investigation Commission was set up at the dawn of freedom in 1947, with S Varadachari as its head. And the first report of the Varadachari Commission led to the first voluntary disclosure scheme in 1951. A dozen studies since Vardachari have studied the quantum of the problem—the estimates of money stashed abroad range from $280 billion to $1.4 trillion. Since 2004, nearly 150 MPs have raised the issue of black money in both the Rajya Sabha and Lok Sabha, on quantum and quality of action. The answers would serve well as sedatives for insomniacs. In terms of action, all we have is a white paper which left much in grey; yet another study and a court directive for a special investigative team is being contested.
Offshoring of gains from tax evasion is not unique to India. Other countries have dealt with it. The US, for instance, forced foreign banks to spill the beans on evaders, enacted the Foreign Account Tax Compliance Act, and put in place preventive mechanisms. It could be done because the US has addressed the demand side of corruption and tax evasion—namely funding of politics. The opaqueness in the business model of Indian politics enables the persistence of corruption and tax evasion. Till this is fixed, there is no escape from episodic spasms or the reality show.
Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change