Rich Indians stash illegal $500bn abroad

Rich Indians have stashed away almost $500-billion of illicit money abroad, parking the funds in countries considered the “least corrupt”, the country’s top police agency said on Monday.

The issue of so-called “black money” has been a major political headache for India’s government, which has faced pressure from corruption activists and political opponents to do more to claw back money held abroad.

“It is estimated that around $500-billion of illegal money belonging to Indians is deposited in tax havens abroad,” AP Singh, director of the Central Bureau of Investigation (CBI), told an Interpol conference in New Delhi.

Singh said the countries rated as least corrupt by Transparency International, a global anti-graft watchdog, turned out to be the ones where “most of the corrupt money goes”.

“The tax havens include New Zealand, which is ranked as the least corrupt country, Singapore ranked number five and Switzerland number seven,” he said, according to the Press Trust of India.

Tax evaders
The CBI chief said that international agreements and other legal hurdles prevented the Indian government from exposing the identity of the tax evaders and bringing the wealth back to the country.

“There are many obstacles to asset recovery. Not only is it a specialised legal process filled with delays and uncertainty but there are also language barriers and a lack of trust when working with other countries,” Singh said.

Heaping further embarrassment on the beleaguered Congress-led government, India’s Supreme Court last year accused it of being reluctant to publish details about untaxed money held in overseas bank accounts.

Singh said criminals were using territorial restrictions of investigating agencies to their advantage and spreading their crime to at least two countries before investing in a third.

“For criminals all it involves is setting up of a few shell companies and then making layered transfers from account to another in a matter of hours as there are no boundaries in banking transactions,” he said.

The World Bank pegs the cross-border flow of money from criminal activities and tax evasion at around $1.5-trillion, of which $40-billion is in bribes paid to government servants in developing countries, according to Singh.

ASSOCHAM, a prominent Indian trade body and think-tank, recently suggested that the government provide a window to tax evaders to disclose their assets parked abroad in exchange for amnesty.

Those making such disclosures would have to pay half the amount as taxes to the Indian government.

“The fact remains that as on date it may not be possible to get hold of these persons who have stashed money abroad that is why the scheme is an invitation to these people to come forward and pay taxes,” it said in a report. — AFP

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