Column

Another interesting thing which is taking place is the result of the crackdown in Germany. An April 8 report by Reuters says, "A crackdown on tax havens that prompted Switzerland to loosen its banking secrecy is encouraging more and more Germans to come clean about foreign accounts they use to evade taxes. Berlin has waged a very public campaign to stamp out tax evasion since Klaus Zumwinkel, then chief executive of Deutsche Post and one of Germany's top businessmen, was arrested in a major tax probe last February.

"Zumwinkel kicked off a bit of an avalanche," said Andreas Boehm, a lawyer based in central Berlin. "Afterwards, the number of people coming clean with us... rose by about 400-500%. And that level has been maintained." This is a positive outcome of the LGT affair where India has been reluctant to grab the names of Indians in the list with the Germans.

A report in a leading Indian magazine in February regarding the foreign travels of the ministers of the Union cabinet states that a large number of them have visited Switzerland including side personal trips, definitely not for skiing in the Alps.
Hence, we can say there are three issues at stake here: The total amount of illegal money stashed abroad; the amount of illegal money kept by Indians in various tax havens; and the amount kept in Switzerland.

On the first issue, developed economies are taking appropriate actions.
On the second and third issues, we are debating about the need to provide exact pin code address and permanent account numbers of the culprits before we even debate.
As for the silence of our business media, both print and electronic, we can surmise that hedge funds etc have invested in many of these companies and it could be through or from these tax havens. That might explain the eloquent silence.

But as a Tamil proverb outs it, can a pumpkin be completely hidden in a katori of curd rice?

The Swiss vaults will be opened up with or without India's role. If it happens as a "collateral benefit" to India, it will make us a banana republic worse than that of Sani Abacha's Nigeria.

The choice is ours. Either we play our necessary role in the global forums and are a facilitator to get back our money, or become a laughing stock when the who's who of India list is published in some American or European news portal.

The writer is professor of finance and control, Indian Institute of Management - Bangalore, and can be contacted at vaidya@iimb.ernet.in. Views are personal.