India may or may not have $462 billion of a black money stash in Swiss and other banks, as LK Advani has alleged, based on the Global Financial Integrity study; and the figure may or may not be as high at $8.8 trillion, as yoga guru Ramdev estimates. The worthies mentioned by Arvind Kejriwal may or may not have money in HSBC’s Switzerland accounts, and these monies may or may not be illegitimate. After all, several of the persons names in the list India got from the French government may have legitimate business reasons that require them to have overseas accounts, not just in Switzerland. In which case, the finance ministry may have done the right thing in not disclosing these names, preferring instead to investigate each case and take appropriate action based on the specific facts.
That said, the finance ministry is probably being optimistic if it feels the 82 Double Taxation Avoidance Agreements and 17 Tax Information Exchange Agreements it has signed will help it get to Indians who’ve avoided taxes and sent money out, as Kejriwal alleged, through the hawala route. While many Indians point to the US success in getting Swiss banks to make public the names of US account holders, this is not because the US is a superpower or because the US government decided to lean—as opposed to the Indian one—on Swiss and other tax havens. Of course the US leaned, but that was after it had successfully proven its case in US courts. In June 2008, for instance, UBS private banker Bradley Birkenfeld, the US Department of Justice website tells you, pleaded guilty to a charge of conspiring to defraud the US of taxes; in November 2008, UBS executive Raoul Weil was indicted by a grand jury in Fort Lauderdale. As part of its prosecution, US government attorneys showed, for instance, that in 2004 alone, Swiss bankers travelled 3,800 times to the US to discuss their clients’ Swiss accounts. In 2009, UBS paid a $780 million fine and then agreed to hand over several hundred client names while entering into a deferred prosecution agreement with the US.
Others who paid similar fines included Lloyds Bank ($217 million in January 2009), Credit Suisse ($536 million in December 2009), ABN Amro ($500 million in May 2010), Barclays ($298 million in August 2010), ING ($619 million in June 2012) and HSBC set aside $800 million this month to deal with potential fines, taking the total it has set aside to $1.5 billion. HSBC, the same bank named by Kejriwal, is being investigated by the UK government for criminals doing money laundering through it. India doesn’t have to, like the US Senate report did in June, say that banks like HSBC have a ‘pervasively polluted’ culture that allows them to route shadowy funds, but a serious investigation may be called for.