Black Money confusion

Black Money confusion – 8 questions answered
Kartikeya Tanna | Oct 18, 2014




If you can’t trust the Modi Government yet, at least don’t doubt it yet.

Q1. How did Friday’s controversy – that the Centre is unwilling to disclose all details about all Black Money holders – erupt?

Answer: At the outset, there may (I say ‘may’ because I am not sure if anyone from the Centre gave official explanation of the application filed before the SC) have been the wrong choice of words in communicating the nature of application filed by the Centre in the ongoing case in the Supreme Court on Black Money menace. The Centre filed an application essentially stating that it could not reveal/disclose all details pertaining to accounts held in tax havens like Switzerland or Lichtenstein against whom investigation hadn’t even commenced or was still pending. Somehow, somewhere, the word ‘foreign’ got replaced by ‘black’. That’s a misnomer. All foreign accounts held even in those tax havens aren’t automatically ‘black’ money accounts. Therefore, when Centre receives list of Indian nationals holding accounts in such countries, it has to first investigate whether there’s any tax evasion or criminality of any nature with the monies lying in such accounts. Till it concludes at least prima facie that there is some illegality/evasion, it cannot go on a mindless revelation spree and lay ground for a media trial.

Q2. Why are there allegations of hypocrisy on BJP?

Answer: Some time in 2011 (and perhaps even later in the run-up to 2014 elections), the BJP led by LK Advani insisted that UPA reveal all details of all Black Money accounts before the nation. Quite honestly, the BJP either didn’t understand the basic fact (that all foreign accounts aren’t necessarily black) or chose to play politics about it. That said, subject to being corrected, I don’t remember if our PM or FM explicitly asked for details to be made public even prior to preliminary investigation. Indeed, politically, it is coming back to haunt the BJP. There’s no doubt about it.

Q3. Why is it being said that Modi Government never really intended to bring back Black Money?

Answer: That is just balderdash. Not mindlessly revealing all details of all foreign accounts (even in tax havens) prior to investigation is not equal to rescinding on the promise to get back Black Money. That is just propaganda, in part helped by Ram Jethmalani’s patently obvious attack on a section of Modi Government.

Q4. So, why can’t the Centre disclose all Black Money details?

Answer: Once again, a distinction must be drawn between ‘foreign’ accounts and ‘Black Money’ accounts. Not all foreign accounts are Black Money accounts. Moreover, information about foreign accounts cannot be disclosed only if investigation is still pending or it hasn’t even started. Finance Minister Arun Jaitley has clearly said that once charges are filed (i.e. investigation necessitates prosecution), there is no problem revealing those names. But doing an en masse disclosure of all information received about foreign accounts from these countries is a violation of laws.

Q5. Which laws does pre-prosecution disclosure violate?

Answer: Two laws. I have explained at length in my Storify. To summarise, one is the Double Taxation Avoidance Agreement (DTAA) entered into between India and those countries (Germany or Switzerland). Remember, information about Lichtenstein was obtained from Germany. The DTAA requires information to be held confidential. However, that information can, indeed, be used for public court proceedings (i.e., once charges are filed). In any event, once prosecution commences, the details are made public anyways. The other law which such pre-prosecution disclosure violates is the Constitutional right to privacy. The Supreme Court has categorically stated in this very case of Black Money menace (in a 2011 order) that a pre-prosecution disclosure would amount to an infringement of right to privacy. Indeed, if a legitimate businessman has an account in Switzerland for his/her business or for one’s children studying in Switzerland, and Switzerland gives us details of those accounts as well, does it mean those are ‘Black Money’ accounts? Obviously not. And these legitimate people deserve a right to privacy – in fact, everyone does until investigation reveals illegality or criminality.

Q6: Can’t the Centre disregard these obstacles and reveal all details nonetheless?

Answer: DTAA is an international treaty between two countries. Sure, such treaties have been violated in the past. But that has serious ramifications on the sustenance of further cooperation between the two nations. If we ignore DTAA obligations, then forget ever getting more information on Black Money or even bringing the money back. Secondly, and this is what Jaitley forgot to mention in his presser on Friday, if we do a pre-prosecution disclosure, we may well commit contempt of Supreme Court’s categorical order which considers it as a serious infringement of the right to privacy. I don’t think anyone wants either.

Q7: Why did India even enter into such a restrictive DTAA?

Answer: That is again a vacuous understanding of international relations and treaties. Sadly, the political furore on Friday led our otherwise rational Finance Minister to jump the propaganda battle by alleging that it was the Congress to have entered into the DTAA with Germany in 1995. Yes, Congress did sign the DTAA. But, on the whole, DTAA is an enabling treaty to obtain vital information about Indian nationals having accounts in havens. The information obtained isn’t for mindless disclosure and sensationalisation, but to investigate and press charges and then reveal information. Therefore, the efficacy of DTAA depends on how quick India investigates and commences prosecution against wrongdoers. If India has hitherto (specially by the UPA as my Storify explains elaborately) prevaricated on its actions, DTAA obviously serves no purpose.

Q8: How can one trust Modi government amid all this?

Answer: If you can’t trust it yet, at least don’t doubt it yet. The key isn’t the obstacles which prevent both UPA and Modi government from mindless revelation. Unfortunately, Ram Jethmalani, despite being involved in this case since its inception (he’s the main petitioner), chose to play to the gallery. The key is – who acts with alacrity. The UPA has clearly prevaricated as I said in the question above. If Modi government does the same, surely, blame it by all means. But it would only be fair to give it some time. Media reports and Jaitley’s presser on Friday suggest Modi government has taken several steps to first at least get all the information. Without all the information at our disposal, we are nowhere.