CBI boss says $500 bn stashed abroad

Last Updated: Mon, Feb 13, 2012 19:33 hrs

For the first time, a top government official has put a figure to unaccounted money stashed by Indians abroad. Central Bureau of Investigation (CBI) director

A P Singh on Monday said it was estimated Indians had stashed about $500 billion in tax havens abroad. India had suffered heavily from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein and British Virgin Islands, he said.

The figure pegged by Singh assumes significance, as the government has time and again stated there is no credible estimate of the amount, given that various agencies had put varied numbers.

“The largest depositors in Swiss banks are also reported to be Indians,” Singh said at an Interpol global programme on anti-corruption and asset recovery. “For criminals, all it involves is setting up a few shell companies and then making layered transfers from one account to another in a matter of hours, as there are no boundaries in banking transactions,” he added.

He said there was a lack of political will in these countries to part with the information required to trace such assets. They were aware of the extent to which their economies had become geared to the flow of illegal capital from poorer countries, he said.

The amount of $500 billion (roughly Rs 25 lakh crore) is a little more than one-third of the money supply in the economy at $1,430 billion or Rs 71.6 lakh crore and over two and a half times the currency with Indians at Rs 9.96 lakh crore or $199 billion, as on January 27.

This figure is also close to the $462 billion estimated by Global Financial Integrity, quoted by the main opposition party, the BJP, and its leader L K Advani frequently.

Singh said the CBI, in the process of investigations, sent letter rogatories to obtain details of transactions in any particular country. “Obtaining information on each leg of the transaction can take, in many cases, several years,” he said.

He said 53 per cent of the countries said to be the least corrupt in the Transparency International Index were offshore tax havens, where most of the corruption money went. The tax havens included New Zealand, ranked the least corrupt country, Singapore, ranked five, and Switzerland, ranked seven, he said.

The World Bank estimates the cross-border flow of money from criminal activities, including corruption and tax evasion, around $1.5 trillion annually. Singh said around $40 billion of that flow was on account of bribes paid to public officials in developing countries. “Out of this, the World Bank estimates that only $5 billion in stolen assets has been repatriated over the past 15 years. That leaves a wide gap between the outflow from developing countries and subsequent repatriation,” he added.

The last session of Parliament saw a heated exchange on the issue of black money. Finance minister Pranab Mukherjee had earlier said various agencies had pegged the amount of black money stashed by Indians abroad anywhere between $462 billion and $1.4 trillion, but there was no official confirmation of these amounts.

"As the finance minister, I don't have the liberty to quote any random figure on black money. There are various figures, quoted by different sources," he had said. Certain sections had quoted the Swiss Bankers Association as having said Indians had $1.4 trillion deposited in Swiss banks, but he had been unable to locate the body, Mukherjee had said.

He had told the Lok Sabha the government would bring a White Paper giving all the details on black money. The finance ministry has asked the National Council of Applied Economic Research, the National Institute of Public Finance and Policy and the National Institute of Financial Management to study black money generation, both inside and outside India.

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