SC snubs govt, sets up panel to follow black money trail

The govt panel will be part of the two-judge team.

The Supreme Court today appointed a committee of two of its retired judges to follow the trail of black money parked in foreign tax havens. It also asked the government to disclose the names of those holding accounts in foreign banks and against whom inquiries have been initiated.

This is a snub to the government, which has set up its own committee to unearth black money and bring it back to India. The government step was seen as an attempt to pre-empt any move by the court to set up an independent agency on black money.
 

HOW THE BLACK MONEY COOKIE CRUMBLED

SEPTEMBER 2009: Lawyer Ram Jethmalani and some former bureaucrats file a petition in the Supreme Court seeking direction to the government to bring back black money stashed by Indians in foreign banks. The money is said to be to the tune of $1 trillion

• Supreme Court issues a notice to the government
• The immediate issue is the probe against stud farm owner Hasan Ali Khan. Jethmalani and his lawyers say the government is doing nothing to bring Khan to book
• The case is heard in December 2009 and through 2010

APRIL 21 2011: The Bench asks the government why its investigation is focused only on Hasan Ali Khan

APRIL 2011: A committee comprising heads of various probe agencies and specialised departments has been set up to monitor the investigation, the government tells the Supreme Court

MAY 2011: “Where is the speed in the case? … We don’t want to make comments on this,” the court says

•  The Centre opposes the setting up of an SIT or appointment of a retired judge to monitor the functioning of its 10-member committee

JULY 2011: The Supreme Court appoints the SIT

Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, a report by the US-based Global Financial Integrity published in 2010, says at least $500 billion, or Rs 22.5 lakh crore, has been spirited out of India illegally since Independence

The Bench comprising Justice B Sudershan Reddy and Justice S S Nijjar reiterated its apprehension about the government’s seriousness in tracking black money.

The government had told the court about its panel in April. However, this did not convince the court, which today appointed a Special Investigation Team (SIT) comprising Justice Jeevan Reddy and Justice M B Shah. The government committee will be part of the judicial panel. It will include economists who have been asked by the government to prepare a strategy to bring black money parked abroad.

The court told the government to issue the necessary notifications for the SIT, which will report to the court. All government authorities have been asked to cooperate with the SIT. The panel has been empowered to travel to other countries and to collect information from government agencies.

The order, read out by Justice Reddy in a crowded court, described it as “an extremely serious case” and blamed the government and its agencies for not providing the court information and documents, despite repeated directions. The order said the government would be compelled to disclose the names of the secret account holders.

There is already a list of 26 Indians who hold undeclared money in the tax haven of Lichenstein. Several names have also appeared in the media. If there were any cases in which investigations were pending, the government would be duty-bound to reveal them, said the order.

Disclosure of names has been a contentious issue in the court ever since Member of Parliament Ram Jethmalani filed a petition seeking steps to bring black money parked in tax havens to India. The government has argued that it is bound by the secrecy clauses in international treaties.

Anil Divan, senior counsel who argued for Jethmalani, opposed this, saying that the money hidden in secret accounts was linked to terrorism, narcotics and other serious crimes and the tax evasion treaties did not cover such nefarious activities. The order said, “We must express serious reservation on the steps taken by the government...It is clear to us that the investigation was completely stalled and expedited only after the court’s intervention. It was only upon this court’s insistence that a proper investigation was conducted.”

The court said its continued involvement was necessary. This is significant as the presiding judge, Justice B Sudershan Reddy, is retiring this week. The government cannot heave a sigh of relief as the next Bench is bound to continue to prod the government to bring black money stashed abroad to India.