The G-20 summit held recently in London came out with a declaration that secret accounts in foreign banks and tax havens abroad will no longer be tolerated and that at least tax authorities have a right to access information regarding secret accounts.
None of the leaders who gathered for the summit cared to answer why such secret accounts in foreign banks, particularly the Swiss ones, were held sacred earlier. Bu the message of the declaration was clear. The global financial system is fast losing credibility and needs to plug glaring malpractices in order to maintain at least a modicum of respectability. All the leaders, including the Indian Prime Minister, Manmohan Singh, agreed to take immediate steps to unearth these accounts.
What kind of mechanisms will be created to unearth these accounts and stop their further breeding was not made clear however. Whether the information about these accounts will be made public, the money seized and the holder of the accounts punished according to the law of the land are being discussed more in the theoretical than the practical realm.
Meanwhile this issue has become a major electoral issue between the Congress and the BJP in the ongoing 15th Lok Sabha polls with a lot of accusations and counter accusations being traded between them.
It is estimated that the loot from India into secret bank accounts abroad can be between Rs 50 lakh crore and Rs 100 lakh crore. A study by the Global Financial Integrity has estimated that in just five years, 2002 to 2006, Indian capitalists stashed away nearly Rs 7 lakh crores in banks abroad. No doubt this black money has been invested by their owners to fetch even more tax free profits for themselves. Even if the total black money in secret accounts in foreign banks is conservatively put at Rs 50 lakh crore, it is a phenomenal amount equal to the sum of several state government budgets. At Rs 1 lakh per house, this amount can finance 50 lakh houses and solve the problem of housing substantially.
While the Congress and BJP keep questioning each others motives in raising this issue at this time and contesting the maths of the magnitude of the loot, the people have a right to demand that they have all the information pertaining to these accounts and mechanisms be worked out to apprehend the culprits and punish them.
Among the culprits are governments and institutions who let this loot happen all these years and hid the truth from the people. Both the Congress and the BJP and political parties who supported their alliances either from within or outside have to answer why this transfer of people’s wealth was allowed to happen. Institutions such as the Reserve Bank of India, which by acts of commission and omission let this practice flourish, should be called to trial.
While both the Congress and BJP are making statements that they would take steps on this issue, the vagueness about the mechanisms and the silence on why this practice was allowed to flourish so far, doesn’t inspire confidence in anyone. How can anyone expect these parties, who thrive on precisely this sort of stashed away wealth for their electoral campaigns, to take concrete steps to eliminate this practice? “A dog’s tail cannot be straightened”, according to a Tamil saying. How can one forget the Bofors payoffs through mysterious foreign bank accounts.
There is a lot of talk about increased accountability and transparency. But to whom? If the debate is limited to increasing accountability and transparency of such practices only to financial regulators and tax authorities, then such accountability and transparency already exist. What is absent is the accountability and transparency of the government and its institutions to the people. Under the existing dispensation, the ruling party, government and financial institutions do not have any compulsions to be accountable to the people – the wage earner, tax payer and savings bank depositers. There are no mechanisms where people’s organizations can investigate such violations and punish the guilty.
The present political process of representative democracy where representatives get elected in the name of the people, but are accountable only to their political parties and big business houses, is incapable of putting an end to such practices. It is a well-known fact that the secret account holders are none other than political party bigwigs, bureaucrats, and scions of big business houses. What interests would the very perpetrators of this practice have in putting an end to it? It is one thing to fool the people with radical statements and another to actually transform the political process.
The stashing away of people’s wealth in tax havens and secret foreign bank accounts by a few looters is one of the glaring rot on the body of the present political process. This rot cannot be cured by superficial cleaning. The entire political process has to be transformed into one where people are empowered and can play a central role in deciding policies, initiating legislation and in supervising their implementation. In this case, a possible solution can be to set up people’s commissions and courts with statutory powers to uncover all information related to these secret accounts in tax havens and foreign banks, recover the money and punish the guilty.
By S. Raghavan