A poorly articulated election promise has landed the BJP government in a controversy over its stand that it could not reveal the names of account holders in foreign banks. Before the elections, Prime Minister Narendra Modi had torn into the Congress using the “kala dhan” issue, promising to bring it back, and even voiced support for the likes of yoga guru Baba Ramdev who had agitated on the issue. The BJP, which had then failed to make a distinction between legitimate foreign bank accounts and black money, has now woken up to this nuance, albeit belatedly, giving the Opposition a chance to shout hypocrisy. That the Centre’s present stance mirrors the erstwhile UPA government’s has given credence to this claim. Nevertheless, this government, which promptly set up a Special Investigation Team into the black money issue, has a good opportunity to override this temporary setback. The trouble with past investigations into tax avoidance, money laundering and financial corruption — with a foreign angle — has been the multiplicity of legislations and agencies tackling each of these illegalities. For example, the Enforcement Directorate (ED) is hampered by the Income Tax department not sharing information in its possession that could help it launch investigations under the Prevention of Money Laundering Act or the Foreign Exchange Management Act. Often, the ED and CBI have had to resort to time-consuming letter rogatories seeking financial information that a foreign agency is under no compulsion to divulge. The Justice MB Shah-headed SIT’s members include the revenue secretary, the RBI deputy governor, Central Board of Direct Taxes chairman and the directors of the IB, ED, CBI and RAW. If this SIT can be institutionalised and become the nodal point for launching investigations, the slow pace of ongoing probes and bottlenecks in inter-agency information sharing can be resolved. However, the government’s defence of its stance in the Supreme Court has not touched upon this aspect. Instead it has resorted to a blame game, pointing out the “weak” provisions of the Double Taxation Avoidance Agreement (DTAA) inked by the then Congress government in 1996 with Germany that has hampered the disclosure of names of individuals until criminal charges have been filed in court. It also pointed out that any act of adventurism in disclosing foreign bank account holders would stem the flow of information on future lawbreakers from these countries.

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More fundamentally, the right to privacy of account holders cannot be breached without prima facie evidence of wrongdoing. The flight of illegitimate capital out of India, first spotlighted by allegations swirling around the Rajiv Gandhi government of the 1980s, can have only two sources in our present economic set-up: politicians and businessmen. With two politically opposed formations, the UPA and the NDA, digressing from the issue of inter-agency coordination, the moot question is, whether there are holy cows being protected. With regard to Swiss banks, the UPA appears to have partially resolved the issue in its amended DTAA inked with Switzerland, which will allow tax authorities to share information for “such other purposes which are allowed under the laws of both states and the competent authority of the supplying state authorities” from 2010 onwards. Unfortunately, there are several riders in this clause. A better course of action would be to create a permanent unit comprising senior officials of every agency which will receive all data emanating from tax havens. Subsequently, negotiations have to be undertaken with foreign countries to amend the respective DTAAs to ensure this agency becomes the interface with them.