Having an account in a foreign bank in a city of choice does not constitute a crime in itself. Doing legitimate business in geographies globally also does not violate any Indian financial or corporate laws. Given that increasingly Indian businesses have a larger foreign footprint and conduct their affairs with several multi-national corporations, NRIs, trusts and a complex web of corporate entities with Indian linkages, making cross border transactions in itself cannot be considered a crime.
Both corporate and financial laws in India will have to be agile and modern to deal with the flow of funds and corporate activity. Having said that, murky dealings of the corporate world have been brought into public domain by both Panama and Paradise documents running into over 13.8 million pages, which have been sieved through by the International Council of Investigative Journalists (ICIJ) and its partner organisations internationally.
The ICIJ campaign against corruption, black money and dark deals globally is testimony to old school journalistic ethics and committed tribe of writers taking upon themselves to clean up the system. Both Panama and Paradise documents are a treasure trove in terms of information and data for law enforcing agencies. It also reveals that free market economic operations are not 100 per cent clean and international operators continue to hoodwink the system.
Virtually, the who’s who of the corporate world figure prominently in the list of 714 Indians that figure in the Paradise documents. Similarly, 426 Indian big wigs were on the select list when the Panama papers hit the headlines in April 2016. What’s starker was that the multi-agency led probe based on the ICIJ-Indian Express expose early last year, moved at a snail’s pace. While a measly Rs 792 crore was identified as “undisclosed wealth” in 147 actionable cases from the Panama papers, agencies investigating international financial crimes have little clue as to how the investigations need to be taken forward.
Now the enforcement directorate, RBI-CBDT-EIU have more workload given that Paradise papers reveal several corporate frauds committed with the specific purpose of promoters profiteering big time and evading taxes. Unless taxation and law enforcement agencies achieve a major breakthrough following the transaction trail, the huge media expose on tax evasion, money laundering and round tripping of profits would go waste.
Clearly, the high and mighty will have to mend their ways, increase compliance and behave more responsibly towards shareholders and small investors. Equally, both the Panama and Paradise papers will provide new life to the Indian government’s campaign against black money, hoarding assets abroad and tax evasion that has been losing steam of late. The Indian government must consider putting in place a multi-disciplinary body within an institutional framework that can deal with off shore transactions and global crimes.
The international community, too, will have to take a call on lifting the veil of secrecy, especially on the European banking system that’s opaque, secretive and largely used by terrorists, drug lords and unsavoury elements to move funds across borders.
India has been at the forefront to push for reforms in the secretive world of banking in the Euro zone. G-20 as a conglomeration of the world’s most powerful nations, have initiated several measures. Bringing about transparency in financial transactions must be top most priority. Only then can the tax evaders and terror outfits be dealt with effectively.