Concrete steps for restitution of illicit wealth (कालाधन् Kaalaadhan)
The following information and suggestions, in Sections A, B and C, are submitted to Hon’ble Justice MB Shah, Chairman of Special Investigation Team on Black Money, and Hon’ble Justice Arijit Pasayat, Vice-Chairman, SIT in India for consideration.
Section A. Background information in brief on the role of ACACI since 2011 in the fight against Corruption in India leading to illicit wealth (Kaalaadhan)
Submitted on behalf of the Action Committee against Corruption in India (ACACI) chaired by Dr. Subramanian Swamy. The ACACI was formed on October 14, 2011 under the chairmanship of Dr. Subramanian Swamy with special focus on illegal money flow in and out of the country. The agenda announced was: “The ACACI will leverage existing national and international laws and move internal and global institutions to discover and recover illegal funds deposited in secret banking channels in about 77 countries. Our areas of focus would include nationalisation of illegal accounts in foreign banks and plugging tax evasion. ACACI has been set up to fight corruption in the space left vacant by two major movements against corruption, led by Anna Hazare and Baba Ramdev. While Hazare’s efforts were focused at revamping present laws and making them free of loopholes, Ramdev concentrated on mass mobilisation. The ACACI will focus on specific action against macro corrupt acts, especially in the criminal misconduct of high level public officials and illegal money flow in and out of the country.”http://zeenews.india.com/news/
ACACI which is a non-profit organization had included respected leaders of civil society, with financial and national security expertise including former Haryana DGP& former CBI Director, the late BR Lall, and the late IAS officer V Sundaram. The ACACI members include: M.D. Nalapat, R. Vaidyanathan, Gurumurthy Swaminathan, AK Doval, Roy Saryu, Sampath, J. Gopikrishnan, A. Surya Prakash, M.R. Venkatesh, Abhishek Joshi. On November 28, 2011 and December 7, 2011, written complaints were submitted to Mr. A.P. Singh, then Director CBI, New Delhi with particular references to disclosure of offences committed under the Prevention of Corruption Act (PCA).
First, is the information from an article published in Schweizer Illustrierte in its November 1991 issue, which magazine is a highly respected and widely circulated magazine in German language, and published in Switzerland. This information discloses that the former Prime Minister, Mr. Rajiv Gandhi (now deceased), had about $2 billion in secret bank accounts in Switzerland, which is clearly disproportionate to his known sources of income as per his affidavit filed with his nomination papers upon becoming a candidate for Lok Sabha elections in 1991. This attracts section 13(1)(e) of the PCA. Although the information is two decades old, Director CBI was aware that there is no time limitation on corruption cases under the PCA. Also, even if Rajiv Gandhi is now deceased, his likely beneficiaries are his wife, Sonia, and two children, two of whom are public servants.
die schweizer konten der diktatoren (Trans. the Swiss accounts of dictators) An expose which resulted in the restitution of illicit wealth of Marcos of the Philippines and others.
The second information is from Dr. Yevgenia Albats, a Russian scholar, holding a Harvard Ph.D. and who was a member of the Inquiry Commission into KGB Activities which Commission was appointed by President Yeltsin of Russia. She subsequently authored a book titled: “A State Within a State: KGB in Soviet Union.” In that book, she disclosed the File Numbers contain evidence of the KGB payments to the then Prime Minister Rajiv Gandhi and his family members. This disclosure was confirmed by the spokesperson of the FIS, the KGB’s successor spy agency (equivalent of our IB and RAW combined) in a Press Conference in 1992, and reported by The Hindu, Times of India, and UNI. In 2002, the then External Affairs Minister Mr. Jaswant Singh had taken this matter up with the Russians and was informed by the Russian authorities that the GOI may send a senior representative of the RAW to Moscow to obtain authenticated records of KGB payments to Rajiv Gandhi and family.
Third was the information that Mr. Rahul gandhi was detained in Boston’s Logan Airport by US law enforcement authorities sometime in the later half of September 2001. He was in possession of $160,000 in cash which he did not declare upon arrival. US Customs require all amounts above $10,000 in cash to be declared, and if not every $10,000 installment carries a 8 year imprisonment, if convicted. This means Rahul Gandhi was indictable for a prison term of 144 years. However, the then Principal Secretary to the PM, Mr.Brijesh Mishra is said to have intervened with US Secretary of State, and arrangements were made get to Mr.Gandhi released.
In his deposition to the US authorities before returning to London Mr.Gandhi had declared that the money was his, and he had drawn it out of his secret account in Pictet Bank, head-quartered in Zurich, Switzerland. It may be mentioned here later that while studying in Rollins College, Winter Park, Florida, USA, Mr.Gandhi paid his Tuition and other fees to the College from his secret accounts.
New information had surfaced which is related to a Geneva court order, freezing the bank accounts of one Sanjay Pasari as reported in Pioneer of Dec. 7, 2011. Mr. Pasari reportedly was acting on behalf of certain Indian public officials. Investigation of this transaction will help ensure the restitution of illicit wealth stashed in tax havens provided Letters Rogatory for prosecuting complaints under PCA are obtained.
After they became aware of these developments -- after US counterparts alerted CBI, Mr. Pasari was merely put in the Undesirable Contact Men's list. But that is clearly insufficient. This development adds up to the ACACI petition submitted to Director CBI on November 28, 2011 in person urging the CBI to register a FIR.
In response to this specific request to CBI to register a FIR, the CBI reply was as follows:
"...that the information contained in both the references is based on certain publications, which is general in nature and lacking in specific details. The contents of the letters, thus, do not give rise to any rational inference of commission of cognizable offences which can be investigated by CBI. In view of the above, no action could be initiated by CBI based on the two letters. Copies of the two letters are, however, being forwarded to Director Enforcement and Secretary (Revenue), for action at their end."
Nothing further has been heard by ACACI either from Ministry of Finance or from CBI.
This dilatory response forces ACACI with no option but to present the case again to SIT on Black Money as an institution representing the authority of the Hon’ble Supreme Court, underscoring the failure of CBI/Enforcement Directorate and again to request SIT to direct CBI/Enforcement Directorate to investigate further and report to Hon'ble SC through SIT.
Further to this, ACACI chairman also wrote to the Finance Minister and also informed the Prime Minister that information had become available that an account existed in Sarasin Bank of Zurich in the name of Sonia Gandhi.
CBI Director had confirmed on February 13, 2012, inaugurating the first interpol global programme on anti-corruption and asset recovery, that Indians are the largest depositors in banks abroad with an estimated 500 billion US dollars (nearly Rs. 24.5 lakh crore) of illegal money stashed by them in tax havens; that largest depositors in Swiss Banks are also reported to be Indians. He also added that there was a lack of political will in the leading tax haven states to part with the information because they are aware of the extent to which their economies have become "geared to this flow of illegal capitals from the poorer countries." http://timesofindia.
After Dr.Subramanian Swamy complained to His Excellency President in mid- April 2014 on Robert Vadra's floating of new SIX companies along with a DLF Director Amit Mehta in all these Six companies...it was reported that Vadra was now winding up these six companies. See Hindustan Times July 8, 2014 :http://www.hindustantimes.com/
Section B. 27 concrete suggestions and specific submissions made to SIT on behalf of ACACI
It is against this background that the following submissions are made to Special Investigation Team of Hon’ble Justice Shah, Chairman of on Black Money and to Hon’ble Justice Arijit Pasayat, Vice-chairman SIT:
1. We submit that SIT may consider inviting members of ACACI to make detailed presentations to SIT, to create an awareness among the citizens of India and the rest of the globe on the seriousness of the problem being tackled by SIT and the imperative of international cooperation to ensure restitution of illicit wealth by a series of measures discussed herein. SIT will find their dedicated service to the nation a contribution of great significance in furthering the objectives of SIT in reporting to Hon’ble Supreme Court and speedy restitution of illicit wealth into the nation’s treasury.2. It is a matter of deep regret that the letter of Arvind Kejriwal and Prashant Bhushan addressed to SIT on 10 November 2014 also includes a photograph showing Hon'ble PM Narendra Modi and Ambani's and it is regrettable that the photograph is also being publicised in the media giving the impression that the letter seems to be only political grandstanding to deflate the high office of the Prime Minister. How this photograph and implied innuendo will be of assistance to SIT is unclear. We feel that the letter addressed to SIT Chairman undermines the role assigned to SIT by the Hon'ble Supreme Court. SIT may consider appropriate measures to prevent such frivolous and malicious innuendos which impinge upon the fair performance of the responsibilities entrusted to SIT.3. SIT must seek a report from Financial Intelligence Unit [FIU] on what it has done on Suspicious Transactions Reported by Banks. This reporting ensures that the Banks on a real time basis report on all Suspicious Transactions for further investigations. SIT should demand that at-least 100 major STRs reported in the past 3 years must be investigated and action taken reported within the next 10 days, while following-up on all other cases promptly, as and when the reports surface.4. There is no precise definition of PEP [politically exposed persons ] in India, while there is no ambiguity in international financial world as may be seen from a Swiss Federation Act on restitution of illicit wealth of PEP discussed further on. Consequently, the Finance Ministry must immediately come out with a guideline on PEP along with all Anti-Money Laundering Vehicles which are known to have been deployed by kaalaadhanis. Link: PEP defined as per UN Convention against Corruption to which India has now become a signatory).5. We request SIT to direct the Finance Ministry and RBI to examine the withdrawal Rs 1000 currency note from circulation to prevent accumulation of kaalaadhan and to combat fake currency notes in circulation devastating the nation’s monetary system.6. SEZs had become an institutional vehicle for Money Laundering till 2011 as there was no tax on them. Subsequently MAT was introduced which led to the collapse of the SEZ economy. A Progress Report should be demanded on the progress in investigations made by ED on all those suspected cases.7. In line with the provisions of Prevention of Money Laundering Act all institutions must declare to the Government as to their Beneficial ownership - this will include ICICI Bank, Axis Bank, HDFC Bank, Jet Airways etc. Unless this is done, ownership of several large corporates will remain unknown and hence exposing themselves to become vehicles for Money Laundering.8. ACACI submission to Director, CBI is reiterated and SIT is requested to seek status of FIR demanded in ACACI letters mentioned earlier.9. Dr. Subramanian Swamy's letter to FM provided information on Zurich Pictet and Sarasin Bank Accounts of the 2G's: Sonia Gandhi and Rahul Gandhi; SIT is requested to seek progress reports on the details of transactions of these accounts and the legal basis for keeping the monies in foreign bank accounts and also on details of any other undeclared assets, if any.10. We request SIT to ask for status on investigation of the Schweizer Illustrierte expose on the illicit wealth of the late PM Rajiv Gandhi.11. We request SIT to investigate on the legatees of this prima facie illicit wealth and inquite about the steps to be taken under the Swiss Federation Act http://www.oecd.org/daf/anti-bribery/anti- briberyconvention/42103425.pdf Swiss Federation Act on the Restitution of Assets of Politically Exposed Persons obtained by Unlawful Means (RIAA) governs the freezing, forfeiture and restitution of the assets of politically exposed persons (PEPs) or their close associates in cases where a request for mutual assistance in criminal matters cannot succeed due to the failure of the judicial system in the requesting state; entered into force on 1 February 2011. 12. We request SIT to recommend to Union of India to issue an ordinance declaring such illicit wealth of politically exposed persons obtained by unlawful means as kaalaadhan and declare such illicit wealth as nationalised; the the kaalaadhan nationalisation ordinance should be conveyed to all financial institutions all over the world to ensure the freezing of all accounts which are under the beneficial ownership of Indian citizens and demanding restitution of this kaalaadhan into Union Treasury Consolidated Fund of India. This ordinance can be for the objectives which were stated when private banks were nationalised on 19 July 1969.13. We request SIT to seek details of private jet travels and the methods of financing the costs of such travels of SoniaG, RahulG, Priyanka Vadra and other members of SoniaG family.14. We request SIT to ask for details of foreign accounts and assets held abroad by the MPs Sonia Gandhi, Rahul Gandhi and their relatives, family members who are politically exposed persons and ask for declarations of the sources of funds for the assets.15. We will update and keep SIT informed on the status of investigation of the corporate fraud of setting up a private company to loot the assets of National Herald (an issue which is under litigation in Patiala Court and Delhi High Court).16. We request SIT to seek investigation of the corporate tax fraud exposed and reported by ICIJ on Pepsi Bottling Group taking shelter under the Luxembourg-India Double Tax Avoidance Treaty and depriving Indian Treasury of legitimate corporate tax revenues. http://www.icij.org/project/luxembourg-leaks 17. The SEBI must be asked to plug the loophole on Participatory Notes (PNs) under the FII Guidelines and act according to findings of Hon'ble SAT in UBS case and Goldman Sachs case. Link:http://www.business-standard.com/article/printer-friendly- version?article_id= 109010501009_1 18. We request SIT to investigate the methods used to override Tarapore Committee of RBI recommendations to phase out Participatory Notes since these derivative financial instruments violate the basic tenet of financial propriety of identity of the beneficial owner of the underlying foreign currency funds (referred to in financial parlance as Know Your Client). Link: Full text of Taraport Committee Report.19. We request SIT to investigate if Indian citizens (that is, NON NRIs) are in the list of Participatory Note Beneficial Owners (assuming that such a list has been compiled by SEBI/RBI/Ministry of Finance).20. We request SIT to investigate and plug the hawala routes used to convert rupee loots into foreign currencies and rerouting them into the Indian Stock Markets as PNs and consequent manipulation of stock prices in the Stock markets by pulling out FIIs (PNotes) and investing PNotes to influence stock price movements, not excluding the interventions ordered by Min. of Finance through the intermediation of investments by LIC and other financial institutions to stabilise the stock market gyrations.21. We request SIT investigation of many Indian looters holding hawala kaalaadhan in Mauritius, Singapore and other tax havens including Cayman Islands, Luxembourg, Switzerland.22. We request SIT to seek status report on the investigation of kaalaadhan of Hassan Ali and the beneficial owners of the monies transacted by Hassan Ali. Link:http://www.thehindu.com/news/national/supreme-court- cancels-hasan-alis-bail/ article2499917.ece Supreme Court cancels Hasan Ali’s bail 23. We request SIT to seek status report on the investigation of kaalaadhan of Moin Qureshi. http://businesstoday.intoday.in/story/hawala-no-books-of- account-after-raids-at-moin- qureshis-premises/1/205747. html 24. We request SIT to investigate the kaalaadhan of Robert Vadra who has been provided with extraordinary security privileges of non-inspection at airports and Indian border crossing points declaring him to be a politically exposed person under international law and as defined in many enactments such as the Swiss Federation Act.25. We request SIT to direct Finance Ministry and RBI to phase out Participatory Notes (PNs) which are known conduits for kaalaadhan using hawala routes within the next six months and to declare all PNs which fail to declare beneficial ownership identities as kaalaadhan under the proposed kaalaadhan nationalisation ordinance.26. We request SIT to direct intelligence agencies to issue interpol notices and notices to all financial institutions about identities of offenders charged under the Money laundering, Prevention of Corruption and other enactments impacting kaalaadhan accumulation and holding of such kaalaadhan outside the jurisdictions of the nation's financial system declaring such acts as treason since the kaalaadhan might have been generated by unlawful activities such as drug trafficking, gun-running, support of terror activities and financial frauds in violation of the laws of the land. The notices should demand freezing of all accounts of such offenders and restitution of the illicit wealth into Consolidated Fund of India. With such forceful action and definitive demands by the Union of India, the institutions all over the world will be forced to respond positively to implementing their announced measures for restitution of illicit wealth by Politically Exposed Persons.27. We request SIT to reiterate the recommendations of the BJP Task Force (in two reports)· http://tinyurl.com/lvu23jg First report 18 April 2009 · http://www.bjp.org/images/pdf/feb_08_bjp_task_ force_report_ii.pdf Secon report 31 Jan. 2011 · http://ap.bjp.org/component/content/article/165 (Rationale) · to invite attention of SIT to the youtube lecture: https://www.youtube.com/watch?v=28LaIAyo_TI Mr. Swaminathan Gurumurthy on Black Money at IIT-Madras Published on Feb 20, 2014.Overview of the presentation: “A healthy economy thrives, to a large extent, on the money that comes into the country's government account as tax revenue. In the Indian context, as a consequence of extensive tax evasion, the concept of black money has flourished in such a manner that it’s a common practice among India's uber wealthy. Come catch Mr Swaminathan Gurumurthy, chalk out the ills caused by the black money on the Indian economy.”
Secion C. Summary of submissions on ordinance for illicit wealth (kaalaadhan) restitution
We submit that the issue of kaalaadhan should not get muffled as a mere taxation avoidance issue but as a major systemic crime of denying the proceeds of wealth within the nation's financial system which denial should be declared as constituting treason with wilful deprivation of opportunities of sharing the wealth for the benefit of the poor people of the nation. Just as the illicit wealth of Mubarak of Egypt or Gaddafi or Libya were declared illicit and restitution of illicit wealth ordered, Union of India through the kaalaadhan ordinance declare the intent of the nation to ensure restitution of nationalised kaalaadhan for the benefit of the deprived poor of the nation and to promote development initiatives of the governments under the Directive Principles of State Policy, as was done for the nationalisation of private banks. Such a declartion of the will of the people of India through an Ordinance by th State will have a chilling effect on the behavior of institutions in tax havens holding illicit wealth of Indian citizens. The suggested ordinance should provide for categorical directions to all financial institutions all over the world and signatories of Inter Governmental Agreements to honour this commitment of the Union of India, that is Bharat to facilitate restitution of illicit monies held outside Indian financial system depriving their beneficial use for the benefit of the poor masses of the nation and for developmental imperatives which are a struggle to overcome the colonial loot and loot by the corrupt violating the laws of the state. SIT may invite Senior Advocate Fali Nariman who had suggested such an Ordinance during his stint as Member of the Rajya Sabha, a suggestion which should now become a crucial instrument of kaalaadhan restitution which is mandated by the Hon’ble Supreme Court to be achieved through decisive actions of SIT on Black Money.
These submissions are made in furtherance of the solemn assurance provided by our Hon’ble PM Narendra Modi ji, to the people of the nation during the recent Lok Sabha election campaigns.
These submissions to SIT are made in good faith, consistent with the objectives which led to the institution being set up closely supervised by the Hon'ble Supreme Court and in response to SIT notification for concrete suggestions from the public.
S. Kalyanaraman, Member ACACI