THE Congress is relying on the short memory of its audience. The fact of the matter is that no one had been pressing more for the replacement of the harsh provisions of FERA than the Congress itself. The changes were being contemplated since 1996. The demand for doing away with the harsh provisions came to a crescendo during the Government of Mr. VP Singh when FERA came to be used for interrogating captains of industry - like Mr. S.L. Kirloskar - under harsh circumstances. As news reports of that period themselves indicate, FEMA which was approved by the Government in July 1998, was on the lines of a draft which had been prepared under the leadership of the preceding finance minister, Mr P. Chidambaram.
Even today, you can go to the website of Rediff-on-the-net, go to their dispatch of 25 July, 1998, on ‘FEMA, Money Bills: Cabinet nods, Parliament’s turn next’, and you will read, ‘‘The Bills were broadly on the lines of a draft prepared under the leadership of then Finance Minister Palaniappan Chidambram.” In any event, there is no mystery about the reasons on account of which the law was changed. They are well set out in the following passage: ‘‘Until recently, we had a law known as the Foreign Exchange (Regulation) Act. Its object was to conserve and augment the forex reserves of the country. The way to hell, it is said, is paved with good intentions.
Like many well-intentioned laws, FERA paved the way to disaster.
FERA created a flourishing black market in foreign exchange. It brought into the economic lexicon the word ‘Hawala’.
Illegal forex transactions became the fuel for the growth of crime syndicates with trans-border connections.
‘‘FERA also became a tool of oppression.
Successive governments persisted with FERA and added COFFEPOSA and SAFEMA. International markets do not respect draconian laws that run counter to common sense. India’s reserves, far from being augmented, dwindled at an alarming rate. Mercifully, FERA was buried finally on May 31, 2000.” When and where was this written? In an article that appeared in The Indian Express on 25 August 2002. Who wrote the article? None other than P. Chidambaram! Is Mr Advani not unwittingly alerting those with illegal money abroad to spirit it away from Switzerland to other tax havens? Another clever little statement by yet another clever lawyer of the Congress party! Would the looters who have stashed away money in tax havens from India still need to be alerted after Germany got the names from Lichtenstein as long ago as last year? Would they still need to be alerted after Germany offered to furnish the names to governments that asked for the names? Would they still need to be alerted after the United States got the names from the leading bank of Switzerland, UBS in February this year, and got it to submit to paying a fine of $ 800 million to boot? Would they still need to be alerted after the G-20 leaders, including Dr. Manmohan Singh as the Congress would like to remind us, declared their determination to get the tax havens to disgorge the names? But such is the confusion in the Congress party and such the brilliance of its lawyers that all it can do is to seek to deflect the nation-wide demand for getting the loot back from tax havens by such witticisms! What was the NDA doing when it was in office? In any case there is doubt about the figures. Leaders of the Congress party would be better advised to ask, ‘‘During that very period, what was the Congress party doing, what were its lawyers and leaders doing, to thwart the efforts of the NDA Government to uncover the names of persons who had looted the country even on defence deals like Bofors?” But even if the NDA had done nothing - whether on terrorism or money abroad - is that any reason for not hurrying to avail of the unique opportunity that has arisen now? Even while replacing FERA by FEMA, the NDA Government made sure that it would have an additional two years to file prosecutions under FERA. And it filed as many as 2000 cases against those who were under investigation before FERA lapsed. The reason for doing so, a reason that is well known to lawyers in the Congress party, was that, when a prosecution is filed it is adjudicated according to the law which prevailed at the time at which the case was filed.
These are the very cases which the Congress later on did not pursue. The fact of the matter is that it is now that the unique opportunity has arisen to get the loot back: Germany has succeeded in getting the names; the US has succeeded in getting the names; the G-20 leaders have pledged themselves to ensure the end of bank secrecy; countries that had hitherto refused to share the requisite information are pledging to do so - within a week of their names being published by OECD in the list of countries that were dragging their feet on the question, Costa Rica, Malaysia, Philippines and Uruguay pledged to enter into the relevant agreements.
Conclusion
There is a real fight ahead: a fight in the national interest, a fight that will have to be waged doggedly to get the names from the tax havens and to get the amounts back to India - as tax havens will not easily part with their route to lucre. And not all countries will be eager to wage the fight - so many rulers in Africa, in Latin America, to say nothing of the princelings of China - will be loath to see the fight succeed.
So, determination and leadership will be required of India, and persistence, and forging alliances with civil society in Europe and elsewhere.
Nor are bilateral agreements any substitute to multilateral pressure.
With close to seventy tax havens, decades will pass before agreements are concluded with each haven, even as money is spirited from the haven that has signed up to the one that is holding out. As has been correctly emphasized, a consensus is already emerging across the country. Leaders outside the political realm, parties such as the CPI(M), SP, BSP, JD(U), AIADMK have all demanded that the Government act energetically to get the names from the tax havens and to get back the amounts.
Instead of quibbling, the Congress would be well-advised to endorse the consensus, and act on it. Not joining secular forces on even so secular an issue?!