Rs 24.5 lakh crore black money in Swiss banks: CBI

Cant bring back booty due to legal hurdles, says minister

Rs 24.5 lakh crore black money in Swiss banks: CBI

Outstripping the presumptive loss in the 2G spectrum scam, Indian black money stashed away in foreign banks is estimated at a staggering $(US) 500 billion or close to Rs 24.5 lakh crore, a revelation made by none other than the CBI, the country’s premier investigation agency.

“It is estimated that around $500 billion of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss banks are also reported to be Indians,” CBI Director A P Singh said after inaugurating an agency to train Interpol officers on how to investigate and recover black money.

Singh’s statement on black money is significant since this is the first time that he is coming clean on Indians’ slush funds abroad.

During the recent winter session of Parliament, Union Finance Minister Pranab Mukherjee had promised to bring out a white paper on black money. Quoting figures of Global Financial Integrity, he had said that from 1948 to 2008, about $213 billion was stashed away by Indians in foreign banks. “At the current value, this would amount to $462 billion,” Mukherjee had said.

However, the Centre is finding it difficult to repatriate the black money stashed abroad because of the lack of political will on the part of foreign governments, said Minister of State for Personnel V Narayanasamy.

“Political will in other countries is not very encouraging. They say we are bound by laws. We are finding it difficult to bring black money stashed away in foreign banks,” he said.

The CBI director also revealed that the states acting as tax havens for illegal money were reluctant to share information as they were aware of the extent to which their economies have become “geared to this flow of illegal capital from the poorer countries.”

“Fifty-three per cent of the countries said to be least corrupt by Transparency International index are offshore tax havens, where most of the corrupt money goes. The tax havens include New Zealand, ranked as the least corrupt country, Singapore, ranked number five, and Switzerland number seven,” Singh said.
Singh said tracing, freezing, confiscation and repatriation of stolen assets is a cumbersome process because of differences in legal systems, high costs in coordinating investigations, inadequate international cooperation and bank secrecy laws.

Complicated

“One of the most complicated aspects of international asset tracing is jurisdiction. Generally, the jurisdiction in criminal law is territorial and it is a well-established principle that one state will not enforce their legal formalities on another state without following proper procedures. Criminals use these principles to their advantage, often spreading the crime over at least two jurisdictions and investing in a third,” Singh said.

The global financial markets allow money to travel faster now, making tracking the money trail even more difficult, Singh said.

“In some of the important cases being investigated by the Central Bureau of Investigation such as 2G spectrum case, Commonwealth Games scam and Madhu Koda scandal, we find that money is taken to Dubai/Singapore/Mauritius from where it goes to Switzerland and other such tax havens," he said.

Singh said World Bank estimates of cross border flow of money from illegal activities and tax evasion is around $ 1.5 trillion, of which $ 40 billion is bribe paid to government servants in developing countries.

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