$500 bn stashed abroad by Indians: CBI
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New Delhi, Feb 13 : In the first official Indian figure ever mentioned on black money parked abroad, the Central Bureau of Investigation (CBI) on Monday said an estimated 500 billion USD, which is equivalent to about Rs 24.5 lakh crore, of illegal money is stashed away in foreign tax havens by the Indian depositors.
CBI director Ambar Pratap Singh made the disclosure at the inaugural function of the First Interpol Global Programme on Anti-Corruption and Asset Recovery.
"India in particular has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein, British Virgin Islands, etc. It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad," Singh said.
"Largest depositors in Swiss banks are also reported to be Indians," he said.
"Development of new methods of financial flows and communication technology have made it easier for the corrupt to conceal and stash away stolen wealth. On the other hand, differences in legal systems, high costs in coordinating investigations, inadequate international cooperation and bank secrecy laws have made the task difficult for the anti-corruption authorities," he said.
"The World Bank estimates the cross border flow of money from criminal activities including corruption and tax evasion to be around 1.5 trillion US Dollars annually. Around 40 billion US dollars of this flow is on account of bribes paid to public officials in the developing countries.
"Out of this, the World Bank estimates that only 5 billion USD in stolen assets have been repatriated over the past 15 years. That leaves a wide gap between the outflow from the developing countries and its subsequent repatriation," he said.
"Tracing, freezing, confiscation and then repatriation of stolen assets is a legal challenge. Managing the asset recovery investigation is complex, time consuming, costly and most importantly requires expertise and political will. There are many obstacles to asset recovery," he said.
He said the global financial market allows money to travel further and faster than ever before. In cases in which that money is the illicit proceeds of crime, particularly in the case of organized crime, this makes the tracing, freezing and recovery of assets even
more difficult, he said.
"One of the most complicated aspects of international asset tracing is the issue of jurisdiction. Generally, the jurisdiction in criminal law is territorial and it is a well established principle that one State will not enforce their legal formalities on another State without following proper procedures. Criminals use these principles to their advantage, often spreading the crime over at least two jurisdictions and investing in a third," he said.
"In some of the recent important cases being investigated by CBI such as 2G/CWG/ and Madhu Koda, we find that money is taken to Dubai/Singapore/Mauritius from where it goes to Switzerland and then British Virgin Island/Caymen Islands and other such tax havens.
"For the criminals all it involves is setting up of 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 said.
He said for the investigators, however, each layer has to be peeled by sending an L.R. (Letter Rogatory) through judicial channels, and obtaining information from each leg of the transaction can take in many cases several years.
"53% of countries said to be least corrupt by the Transparency International Index are offshore tax havens, where most of the corrupt money goes. The tax havens include New Zealand ranked the least corrupt country, Singapore ranked No.5 and
Switzerland ranked No.7," he said.
"There is a lack of political will in the leading tax haven States to part with information required to trace such assets as they are all too aware of the extent to which their own economies have become geared to this flow of illegal capital from the poorer countries," the CBI director added.
Inaugurating the Programme, Union Minister of State for Personnel V. Narayanasamy said the government is committed to fighting the menace of corruption and has taken several initiatives in this direction.
He said that India ratified the United Nations Convention Against Corruption in June, 2011.
Narayanasamy said that recovering and attaching assets created through corrupt means is an important aspect which needs full attention.
Delay or inability to recover ill-gotten assets vitiates the entire process of law enforcement, he said.
Narayanasamy expressed happiness that these aspects will be given importance in the Global Programme on Anti-Corruption and Asset Recovery. He said such global training programmes should be a continuous process, and contents should be suited to user requirements. (IBNS)
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$500 bn stashed abroad by Indians: CBI