Black money: Will SIT deliver?

When Ram Jethmalani petitioned the Supreme Court in late 2009, as a petitioner in person, to seek action against black money hoarded in foreign bank accounts, it dovetailed in with the NDA campaign themes for the 2009 Lok Sabha elections. The theme that in Sonia Gandhi's India, Indian money was lying in foreign banks and unavailable to aid the economy, was a powerful message which resonated through the courts as well. It was an additional political bonus, that the showpiece account belonged to one Hassan Ali Khan, through whose account an astounding 1.2 billion dollars worth of money was transacted.

Though the NDA lost the elections in 2009, the campaign took root, the petition continued to be heard and in July 2001, the Supreme Court ruled "..that in these matters fragmentation of government, and expertise and knowledge, across many departments, agencies and across various jurisdictions, both within the country, and across the globe, is a serious impediment to the conduct of a proper investigation. We hold that it is in fact necessary to create a body that coordinates, directs, and where necessary orders timely and urgent action by various institutions of the state. We also hold that the continued involvement of this court in these matters, in a broad oversight capacity, is necessary for upholding the rule of law, and achievement of constitutional values. However, it would be impossible for this court to be involved in day-to-day investigations, or to constantly monitor each and every aspect of the investigation."

The SIT was constituted by judicial orders when, the court added to the Union of India's high level committee, the director of the Research and Analysis Wing (RAW); and two former eminent judges of the Supreme Court as the chairman and vice-chairman. It directed that that the Special Investigation Team function under the guidance and direction of the former judges.

The SIT was "charged with the responsibilities and duties of investigation, initiation of proceedings, and prosecution, whether in the context of appropriate criminal or civil proceedings of: (a) all issues relating to the matters concerning and arising from unaccounted monies of Hassan Ali Khan and the Tapurias; (b) all other investigations already commenced and are pending, or awaiting to be initiated, with respect to any other known instances of the stashing of unaccounted monies in foreign bank accounts by Indians or other entities operating in India; and (c) all other matters with respect to unaccounted monies being stashed in foreign banks by Indians or other entities operating in India that may arise in the course of such investigations and proceedings."

The SIT was also charged with the responsibility of preparing a comprehensive action plan, including the creation of necessary institutional structures that can enable and strengthen the country's battle against generation of unaccounted monies, and their stashing away in foreign banks or in various forms domestically. The SIT was directed to report and be responsible to the court, and was charged with the duty to keep it informed of all major developments by filing of periodic status reports, and following of any special orders that the court might issue from time to time. The Union of India was directed to issue the appropriate notification and the ministry of finance, was made responsible for creating the appropriate infrastructure and other facilities for proper and effective functioning of the SIT.

What the judgement did was to in effect, induct judicial personnel into the government committee already constituted, rename it as the SIT, give the SIT a specific work - charter and subject the SIT's work to broad judicial oversight. The law officers of the increasingly beleaguered UPA-2 government, charged with dealing with the situation, responded by running out the clock. A review petition, asking for recall of the directions  was filed to delay implementation of the judgement.

In the meanwhile, with a backdrop of scams from 2G, to Coalgate and CWG, the issue of corruption and resultant black money in foreign accounts again became a major campaign theme. The amounts speculated to be salted away were phenomenal. The yoga guru, Baba Ramdev, added to the agitation and estimated a phenomenal seven trillion dollar figure as having been stashed away abroad. Global Financial Integrity (GFI) estimated the figure to be about 462 billion which the CBI director rounded off to 500 billion. A JNU think-tank lead by Prof Arun Kumar estimates an opportunity cost (not actual wealth) of 1.1 trillion dollars.

Narendra Modi, added to the hoopla by making an unrealistic estimate at an election rally, that each Indian would be benefitted to the extent of rupees 15 lakh each, if all the wealth was made available to the government of India to redistribute. For a 1.2 billion population, the figure roughly approximates to a total of 30 trillion dollars. However, the besieged UPA's communication strategy of silence, let all these figures go uncontroverted. As a result, today the aam aadmi believes, that there is a lot of money in accounts abroad, which in acche din, will be retrieved by a strong government and made over to his share.

The court finally dismissed the review petition only in March 2014 and the new NDA government in one of its first administrative actions, finally issued a notification, constituting the SIT on May 27 2014. However an application which sought to shield the names of account holders, from disclosure to the petitioner Ram Jethmalani was persisted with. The government has argued, not without reason, that disclosure of information to a private individual, would violate confidentiality requirements contained in many tax treaties with other countries. These arguments have been advanced even in the past and dealt with by the court itself, which in its 2011 judgement recorded: "The revelation of details of bank accounts of individuals, without establishment of prima facie grounds to accuse them of wrong doing, would be a violation of their rights to privacy. Details of bank accounts can be used by those who want to harass, or otherwise cause damage, to individuals. We cannot remain blind to such possibilities, and indeed experience reveals that public dissemination of banking details, or availability to unauthorised persons, has led to abuse. The mere fact that a citizen has a bank account in a bank located in a particular jurisdiction cannot be a ground for revelation of details of his or her account that the State has acquired."

The court thus in 2011 itself had directed the Union of India to "forthwith disclose to the petitioners all those documents and information which they have secured from Germany"... subject to the condition that it was exempted from revealing the names of those in respect of whom investigations/enquiries are still in progress and no information or evidence of wrongdoing is yet available. It allowed disclosure of the names of those individuals in respect of whom investigations have been concluded, either partially or wholly, and show cause notices issued and proceedings had been initiated.

It is in the above context that the government's strategy before the Supreme Court in the hearings on October 28 and 30 2014, seemed ham-handed. It was bad communication on the finance minister's part to have a selective show and tell session, with favoured journalists ahead of the court hearings. Three names of business people, were revealed in an affidavit which came out into the public domain. Statements by party spokespersons were volunteered that there would be serious embarrassment to the Congress party if the list was revealed in full. The attempt seemed to use the opportunity to hold the list as a sword of Damocles, to threaten political discourse into silence.

Chief Justice Dattu's bench hearing the matter was not amused by a combination of foot-dragging and political point-scoring. It thereupon summoned the entire available list, to be produced in a sealed cover. When the list of more than 600 names was produced, the unopened cover, containing the list was directly forwarded to the SIT for further processing. The court was obviously paying heed to the requirements of confidentiality, that it had earlier formulated. The court's actions have now insulated the government from charges of selectivity and victimisation. Equally the court seems to have indicated a certain wariness of partisanship in a problem that spans parties, businesses and communities. The court means business and its actions indicate that it is unlikely to be fobbed off with platitudes.

What needs to be seen, however, is the seriousness with which the SIT acts. To an outside observer, it appears to be a top-heavy committee, with "too many chiefs and too few Indians". The old adage that a committee is a set of people who can individually do nothing but can collectively determine that nothing can be done, may yet come true. The data provided by the German and French governments is nearly a decade old, there is unlikely to be much money remaining in the accounts. While the evidence of the accounts might suffice to launch a few prosecutions, they will be primarily meant for a demonstration effect that India means business when it comes to tackling the problem of offshore black money. The true test will be the SIT's ability to respond to the court's 2011 judgement and craft a "comprehensive action plan, including the creation of necessary institutional structures that can enable and strengthen the country's battle against generation of unaccounted monies, and their stashing away in foreign banks or in various forms domestically".

The journey against off-shoring of domestically earned black money, is bound to be long, confusing and arduous. With effective prodding from the Supreme Court, the first hesitant steps appear to have been taken.