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The Drama of the Crusade Against Black Money

Sat, 11 Nov 2017 06:59:50 +0000

FOR quite some time, corruption and black money has been agitating the public mind in this country. This was particularly more so, in the urban landscape. This was elevated to an unprecedented height in the run-up to the last general elections in 2014. The background music was provided by the anti-corruption campaign under the banner of India against corruption led by the `Gandhian icon’ Anna Hazare.

Image: PTI

However, the central demand of the Anna Hazare-led movement which doubtlessly captured the public mood against growing instances of corruption and scam under the UPA dispensation was to have an all-powerful Lokpal in place; an institutionalised ombudsman who would be invested with no holds barred powers for nabbing corruption in high places. This campaign brought a sting into the prime ministerial campaign of Narendra Modi. The Modi campaign, of course, added spice by making a very specific claim that within hundred days of his assumption of office, each Indian citizen would be richer by Rs 15 lakhs which would directly find its way into the individual bank accounts!

That is now history; and, indeed, a ‘bad joke’! No less than Modi’s man-Friday, BJP president Amit Shah has publicly admitted that it was a mere electoral rhetoric – a jumla. But nobody talks of the Jan Lokpal which added the urgency in the momentum to oust the Congress and to install Modi in South Block. After three and a half years, India awaits the establishment of a new Lokpal.

‘CRUSADE AGAINST BLACK MONEY’
The Modi bandwagon’s familiar trait has been to adopt a hit and run approach. To shrug off these obvious omissions, an anti-corruption, anti-black money narrative has been their mainstay. The initial honeymoon period and the comparative demobilised state of the principal opposition helped the government to have its writ run with consummate ease.

Having no less comprehension than anybody else, the Modi government’s narrative on black money stashed in secret foreign bank accounts and tax havens have remained largely confined to repeating mundane details of number of investigations, number of possible cases, number of individuals involved and so on and so forth. The Special Investigating Team (SIT) set-up at the behest of the Supreme Court has reportedly completed its primary study of the material. Based on that, the SIT is also said to have given its recommendations to the government. However, the opacity with which the government functions ensured these recommendations are not shared in the public domain.

Obviously, the Modi government with its aggressive neo-liberal policies which fringes on completely abrogating personal freedom of individual citizens, in its bid to create a National Security State, much in the line of most ultra-rightwing regimes in other parts of the world, knows well that the legal framework of the country is ill-equipped to deal with the international financial flows which make ‘black money’ to be stashed in foreign locations and often, re-routed back to the country for super profits.

In fact, this is all too well-known. After the share market scam, in the first years of this century, the parliamentary committee enquiry concluded that new financial instruments which marked the current phase of financial globalisation like participatory notes, incorporation of Overseas Corporate Bodies and their activities which made financial flows both outside and inside the country to facilitate tax evasion and other activities for enhancing the wealth of the super rich were beyond the reach for our regulators. Therefore, any meaningful initiative to stop generation of black money using the foreign route would require a new law. That law needs to take into account the experience internationally define new types of financial crimes and so on and so forth. Specifically, the UN convention on corruption could be a good starting point, enabling us better access to offshore data. But, alas, this was not to be!

DEMONETISATION: ‘SPEARHEAD TO WEED OUT BLACK MONEY’
Knowing full well that in the present age of international finance driven globalisation, only 6 per cent of India’s black income are held in cash, the fateful announcement by the prime minister to the nation on November 8, 2016 unleashed an unprecedented campaign which targeted the large denomination notes which accounted for 86 per cent of cash in circulation. With black incomes mainly held in real estate, shell companies formally located in tax havens, precious mineral, gold and ornaments and so on and so forth, the government was destined to fail in its mission against black money.

Naturally, almost the entire amount of extinguished currencies have come back proving the government’s claims and estimates even made in statements before the Supreme Court to be totally without any practical basis. It has brought untold miseries to the ordinary people starving the informal and unorganised sector, the peasantry and millions of common citizens and small depositors in banks who had been debarred from accessing their own money deposited in savings accounts. The overall impact of this disaster is now for all to see. The growth rate of the economy has plummeted. But the main burden of the catastrophe has been borne by the more vulnerable sections of the working population. The most severe impact has been on the employment sector, with not only the failure to create new jobs but even slashing existing ones. Whichever way the employment figures are being calculated, the grave crisis is palpable.

But far from admitting their mistake, the government is continuing with its grand narrative of this ‘crusade against black money’. While responding to the opposition’s call for observing the anniversary of demonetisation to bring out the tragic outcome on the life and livelihood of the people, the government has announced its celebration of this crusade on November 8. Deceit could not be more sinister!

PARADISE PAPERS: A STRANGE IRONY
But an earthshaking revelation of the dynamics of international finance capital and the architecture of the present, globalised international financial and economic order has hit the global media space with unprecedented strength and velocity. The Paradise Papers have been brought into the public domain.

The Paradise Papers constitute a stock of 13.4 million corporate records primarily from the Bermuda firm Appleby and Singapore-based Asiaciti Trust and corporate registries maintained by governments in 19 secrecy jurisdictions which go by the description of `tax paradises’. The leaks of these corporate records were secured by the German newspaper, Süddeutsche Zeitung. The German media group shared their great acquisition with the International Consortium of Investigative Journalists (ICIJ), obviously realising that the humongous material could not be processed in a publishable form without international cooperation. The Indian Express, as the Indian collaborator of this international media effort, has now come out with the results of their stupendous scrutiny of information and data.

Unlike the earlier material from Offshore Leaks (2013), Swiss Leaks (2015) and Panama Papers (2016), Paradise Papers focused on the shadowy activities of giant corporate groups and their veiled offshore financial activities rather than those on individuals. Appleby, like the Mossack Fonseca (as in Panama Papers 2016), facilitates setting up of companies and bank accounts overseas providing for nominee office bearers and helping secure bank loans and transfer of shares behind multiple secrecy jurisdictions. In a true sense, Paradise Papers symptomatise the soft underbelly of the shenanigans of international finance capital, providing them the ‘veil of secrecy’. Entity like Appleby, although not a tax adviser, with an experience of 119 years is a leading member of the global network of lawyers, accountants, bankers and other operatives who helps set-up offshore companies, manage bank accounts for clients to avoid or evade taxes, manage real estate assets, open escrow accounts, purchase private aircrafts and luxury yachts paying low tax rates and simply employ offshore vehicles to move millions of dollars across the world.

Setting up offshore financial facilities for corporate benefit in a rapidly globalising world may not be per se illegal. But, for a growingly unequal world, firms like Appleby hold a key in helping MNCs to exploit loopholes in respective domestic laws to avoid legitimate taxes thereby accentuating the inequality which is eventually threatening those economies.

In the wake of the Paradise Papers, Bernie Sanders has rightly posed the question – “The major issue of our time is the rapid movement towards international oligarchy in which a handful of billionaires own and control a significant part of the global economy. The Paradise Papers shows how these billionaires and MNCs get richer by hiding their wealth and profits and avoid paying their fair share of taxes.”

THE INDIAN STORY
Among the 180 countries whose references appear in the data, India ranks 19th. Their numbers amount to 714 individuals. Among Appleby’s clients, Sun Group, an Indian corporate, is the second largest, internationally. A large number of Indian corporate including the Adanis and Ambanis also appear in the references along with well-known politicians including sitting and former ministers.

It is clear that the offshore footprints of some of India’s major corporate players came to incorporate shell overseas companies on a huge scale. The memos show how most of these were controlled from India. The papers reveal that assets of Indian companies were being used to guarantee loans by offshore companies without disclosure to Indian regulators, change in ownership of offshore companies to actually change the ownership of shares held in Indian companies without paying taxes and, of course, round tripping.
All these could take place because of absence of appropriate provision in the Statute Book or the text of the bilateral treaties for avoiding double taxation.

Paradise Papers should definitely help Indian regulators to access information for plugging revenue leakages and criminal actions.

DECEIT OF MODI GOVERNMENT IS PARAMOUNT
The Paradise Papers have actually proved that black money or rather black incomes arising from avoidance and evasion of taxes on income and wealth at the cost of public exchequer is not so much through manipulation and concealment of cash held; but essentially through such web of transactions concealed through the ‘veil of secrecy’. It is also clear that the government whose initiative should be in evolving clear laws to plug the loopholes for such activities to deny information to regulators. As much as demonetisation had a disastrous impact on the economy in general and the poor and the vulnerable in particular, it was more of a charade to cover up the delinquencies of the rich and the powerful corporates who are backing the government.

The changes brought in the Foreign Contribution Regulation Act and Companies Act through Finance Acts of 2016 and 2017 have resulted in removing the cap on corporate donations to political parties, enabling of foreign contributions conducive to influx of foreign and corporate capital flooding their coffers, obviously for a quid pro quo and removing the requirement of disclosure of the recipients of such donations.

While the ‘brave new world of global finance’ as revealed in the Paradise Papers is wreaking havoc for the public exchequer, the corporates are being further facilitated to gain further stranglehold on the political process and government formation.
The demonetisation exercise is, therefore, a distraction to create an impression that the government is seriously waging a war against black money! In every other way, the rich and the powerful have been its beneficiary and the most vulnerable its worst victims. The hypocrisy of the government is now way too obvious from these experiences!

Courtesy: http://peoplesdemocracy.in/

The post The Drama of the Crusade Against Black Money appeared first on SabrangIndia.

Subversive Sangh

Sat, 31 Aug 2002 18:30:00 +0000

With the BJP controlling the central government, the threat of subversion of the Constitution and the Parliament is very real

Courtesy: bbc.com

It is not a mere coincidence that the last three election manifestos of the Bharatiya Janata Party (BJP) included the issue of a review of the Indian Con-stitution. And the fact that the BJP could manage to smuggle in this issue as part of the national agenda for government — the joint common manifestos of the motley combination, which calls itself the National Democratic Alliance — betrayed the intolerance of the Hindutva forces spearheaded by its political arm, the BJP, to the present Constitution. It is also quite revealing that once it assumed office it went ahead with the formation of the Constitution Review Commission, which has since submitted its report. The attempts at tinkering with the basic features of the Indian Constitution, which has the parliamentary system as the centre–piece of the political structure, provides a sharp contrast to the involvement of elected representatives of the people as inherent in the Constituent Assembly and underlines the alien nature of this latter attempt which essentially is divorced from the people and their aspirations.

Fortunately, the composition of the Indian Parliament as of now, and the insight of a broad array of political forces into the possible dangers of the Hindutva forces in redefining the secular democratic and composite nature of the Indian State and society have largely thwarted the potential mischief–making potential of the move. The silence of the government thereafter, on implementing some of the issues raised by the constitution review is a case in point. Perhaps we will hear more about it on the eve of the coming election.

In response to his plea to lift the ban on the RSS, in 1948 the then Prime Minister Pandit Jawaharlal Nehru had observed in a letter to the then RSS chief and the most influential of Hindutva ideologues, MS Golwalkar: “In the course of the last year both the central government and the provincial governments have received a mass of information in regard to the objectives and activities of the RSS. This information does not fit in with what has been stated by you in this behalf. Indeed it would appear that the declared objectives have little to do with the real ones and with the activities carried on in various forms and ways by people associated with the RSS. These real objectives appear to be completely opposed to the decision of the Indian Parliament and the provisions of the proposed Constitution of India.”

But now that the BJP has virtually come to control the central government thanks to the servile capitulation of its so-called secular allies, the threat of subversion of the Constitution and the Parliament is very real. In the wake of the ban on the RSS, the Hindutva forces had found themselves completely on the back foot. And it is against this background that the Jan Sangh was formed in the early 50’s, since nobody was prepared to take up the Hindutva view in the Indian Parliament at that point of time. Subsequently, by the mid 60s, though the Jan Sangh had increased its strength in Parliament and tried its best to use the floor of the two Houses to further the interest of the Hindutva cause, they met with limited success. Though the Sangh elements managed to position themselves crucially within the Janata Party in the general background against the authoritarian politics of the Congress Party epitomised by the Emergency, during the late 70’s, notwithstanding the success they achieved in planting Sangh Parivar elements in important governmental positions (particularly in the media with Advani handling the I&B portfolio), the fight back by the secularists led by Madhu Limaye on the dual membership question led to the Hindutva forces suffering a set-back.

By the 1984 elections, the BJP, the new incarnation of the Jan Sangh, came down to an all time low of just two members in the Lok Sabha. But the fortunes of the Hindutva forces started looking up, with the Hindutva campaign concentrating on “pseudo secularism” against the Congress after the Rajiv Gandhi government’s completely misplaced decision to placate fundamentalist elements by reversing the Supreme Court judgment on the Shah Bano case.

The use of Parliament by the Hindutva forces reached a most crucial phase with the Ram Mandir campaign in the early 90s. The BJP used the floor of the Parliament to propagate the mandir cause and ultimately, along with the National Integration Council, the two Houses were also used to hoodwink the nation on its real game plan about bringing down the Babri Masjid. However, this gory act once again saw the BJP finding itself in splendid isolation. The spectacle of Vajpayee completely lost standing alone in the Lok Sabha in an atmosphere of all–round condemnation will continue to be part of an enduring memory in the annals of the Indian Parliament.

But the fact that Vajpayee did not outright condemn the unmaking of the Indian Constitution in Ayodhya was a crucial point in the process of the Hindutva forces’ attempt to subvert Parliament. The Hindutva forces attempt at subverting Parliament went on unabated till 1998, so long as it was in the Opposition. But these efforts did not help the BJP emerge out of its political isolation.

However, these subversive efforts assumed a new dimension with the NDA government’s assumption of office in 1998. The dubious political and ideological premise which separated the BJP from its allies was promised to be relegated to the backburner on the eve of the elections. When questioned by the media on the absence of controversial issues like the reconstruction of the Ram Temple in Ayodhya, or scrapping of Article 370 of the Constitution at the time of the release of the NDA’s common election manifesto, Vajpayee pointedly stated that the NDA, if voted to power, would have nothing to do with these issues.

The so-called secular allies of the BJP and NDA allowed themselves to suffer the self–delusion that the BJP was abandoning these issues for good. This was despite the fact that the Hindutva brigade did not make any secret about merely putting them on hold and not really abandoning them. But opportunism and lust for power prevailed in so far as the thinking of these so–called allies was concerned. To start with, the BJP was cautious and gave the impression that it was genuinely sensitive to the allies’ concern over the controversial issues. But as and when the vulnerabilities of these allies were exposed, the BJP went on the offensive, more so, after the NDA was re–elected to office in 1999.

The first major issue in its attempt to subvert the parliamentary system started with the efforts in securing endorsement for the Gujarat government’s decision to allow its employees the freedom to associate with the RSS. This was in complete contravention of the existing rules. The Opposition wanted the government to advise the Gujarat government to reverse this decision. Not only the Opposition, even a section of the NDA put its foot down, rubbishing the bid of BJP leaders at the Centre to pretend they did not wish to interfere or undermine the ‘legitimate authority’ of a state government.

The protest against this led to the stoppage of normal transaction of business in both houses of Parliament. In the face of such strong resistance, the government had to relent and appropriate advice was communicated to the Gujarat government, leading to the scrapping of the latter’s earlier order.

The next major confrontation was sparked off by Vajpayee’s infamous assertion that the ‘reconstruction of the Ram Temple was an expression of national sentiment.’ The debate on this dubious statement by the Prime Minister brought out the hypocritical commitment of the BJP to keep Hindutva agenda out of the government’s ambit. The Opposition did well to expose the sham and the Rajya Sabha, where the Opposition was in majority, voted a resolution disapproving the Prime Minister’s statement. But the flip side of this development was that so-called secular allies with otherwise impeccable credentials steeped in non–Brahminical Dravidian ideology like the DMK, MDMK or PMK sided with the government over such a crude expression of Hindutva.
The Ayodhya issue also saw government efforts at making the construction of the Ram Temple a part of the government’s agenda by offering legitimacy to the shiladaan program sponsored by the VHP and the Ram Janmabhoomi Nyas even as the matter remains pending before the Supreme Court. It is the Prime Minister who gave legitimacy to the VHP’s pernicious design by promising it a deadline on the issue.

As long as the Hindutva forces are not ideologically weeded out from the body politic, the threat of Hindutva subverting Parliament will be real. The legislature and its capacity to assert its independence flow from the executive’s accountability.

Having thus allowed the drift and once again put the entire nation on tenterhooks, the Prime Minister justified the action of the attorney general making the government a party to a religious ceremony. Another major attempt at undermining secularism as the mainstay of state policy by the Hindutva forces is related to its series of actions aimed at saffronising education. Be it the question of withdrawal of manuscripts edited by secular historians for the ‘India Wins Freedom’ series or rewriting of NCERT history text books or framing of the national curriculum policy, Union minister for human resources development, Murli Manohar Joshi misled the Parliament and the nation with half-truths and plain lies. That the Opposition nailed these lies is a different issue.

But the most serious of all attempts to subvert Parliament by the Hindutva forces was over the Gujarat development.In the first week of March itself, the treasury benches refused to accept the terming of the indiscriminate looting, killings, arson, rape of the hapless minorities in Gujarat as state–sponsored genocide. All important ministers of the government, particularly LK Advani and Arun Jaitley justified Narendra Modi’s infamous “every action has an opposition reaction” theory, linking the communal carnage to the Godhra incident. Gaping holes in the government’s line of argument can be identified in the three debates which have taken place so far in Parliament on the subject. Attacks on independent institutions like the National Human Rights Commission (NHRC) and the National Commission for Minorities have been major features of the government’s stand. On the floor of the House, Jaitley defended intolerance of the media, like the blocking of Star News coverage of the Gujarat genocide. Venkaiah Naidu was so enraged over facts quoted from the special issue of Communalism Combat on Gujarat that he demanded an immediate banning of the publication. Only a reminder that it is a legitimately published magazine brought him to his senses. The contradictory facts over the Godhra incident also bear testimony to the government’s attempts at subverting Parliament. Notwithstanding the government’s most blatant attempts to shield the Modi government and the indefensible acts of the Hindutva forces in Gujarat, the NDA–government ultimately had to be a party to a resolution in the Rajya Sabha accepting the failure of the Gujarat government and its own inaction.

To conclude, as long as the Hindutva forces are not ideologically weeded out from the body politic, the threat of Hindutva subverting Parliament will be real. The legislature and its capacity to assert its independence flow from the executive’s accountability. This is how the makers of the Constitution conceived the parliamentary system in our country. Given the obnoxious record of the BJP and the Hindutva forces, the threat is all the more serious.

In democracies the world over, the functioning of the legislature is inseparably linked to the functioning of a free press reflecting truthfully the development and proceedings in Parliament. Therefore, in the coming days, vigilance has to be redoubled to safeguard Parliament from such pernicious attempts at subversion.

Archived from Communalism Combat, September 2002, Anniversary Issue (9th), Year 9 No. 80, Subversive Sangh

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