According a front page report in a leading national daily on Monday, 1,195 Indians, which is approximately double the 628 names that French authorities had given to the Indian government in 2011, held accounts with HSBC’s private banking arm in Switzerland. The investigation by the leading Indian daily is part of a global effort, which saw 140 journalists worldwide go through the list of Swiss bank account holders. The list of account holders had first come into the possession of Paris-based newspaper Le Monde. The list, though, owes its existence to Hervé Falciani, a former employee of the HSBC’s Geneva office, who walked out with 11 floppy discs containing the names of 130,000 account holders. Among those on the list, the names that stand out are Mukesh and Anil Ambani, besides other businessmen, corporate heads, politicians and two officers of the Indian Revenue Service.
Interestingly the nation’s richest man Mukesh Ambani does not top the list of Indians holding money in the Swiss bank account. A former Reliance Industries employee Sandeep Tandon, who used to manage the company’s taxation work, figured higher on the list. Tandon was also a former Indian Revenue Service officer. The significance of this particular list takes us back to 2012, when Arvind Kerjiwal, then as an activist with the Anna Hazare-led India Against Corruption movement, held a press conference, alleging that Mukesh and Anil Ambani, among others, had crores of rupees stashed in Swiss banks. Although Kejriwal got some of the names right, the Indian daily claims that his figures are “way off the mark”. The daily, however, is also careful to note that not all these accounts hold black money. However, in light of the secrecy surrounding Swiss bank accounts and that “undeclared wealth is an important part of political discourse involving the government, the Supreme Court and the central bank”, the daily thought it was worth making the list public.
Considering The Economist had described Reliance as “a rotten model for corporate India”, it is no surprise that both Ambani brothers figure on the list. Although many commentators have speculated on the amount of wealth they held in foreign bank accounts, it has been very difficult to nail the Ambanis on paper. In fact, it was reported in 2012 that HSBC had apologised to Mukesh Ambani for “embroiling” him in the black money controversy, saying its private banking unit did not have his account number.
Although doubts can now be raised of the veracity of this news report, Monday’s details date back to 2007 and the sum listed may not be entirely illegal or undeclared. There is, however, a larger lesson to be learnt from the above news reports. The Ambanis, like many other industrial giants, do significantly benefit from incentives provided by the government to conduct their operations in India. Legal provisions for tax avoidance, according to supporters of major industrial giants, encourage more business. More business, they further argue, provide greater scope for growth and a stronger economy. These tax laws, however, are supposed to benefit the nation and the common tax payer.
If these laws do not encourage much economic growth, the taxpayer does have the right to question these laws and suggest changes if necessary. Though tax avoidance is not illegal per se, it does not make it right. Large business companies do circumvent these rules and devise ingenious ways to avoid paying taxes faster than the speed at which governments can amend laws. In articulating its reasons for publishing the list of account holders in the United Kingdom, The Guardian said, “Not all HSBC’s Swiss private bank customers are public figures and many are not dishonest... However, others emerge, according to the files, as would-be – though legal – tax avoiders of one kind or another, who would have deprived the UK and other countries of revenue to provide public services… the public, should be entitled to know what has been going on in Switzerland.”
In his reaction to the expose, Union Finance Minister Arun Jaitley said that any additional names of resident Indians that surface will be brought under the government’s ongoing investigation. Although the majority of names that were released on Monday’s list were already available with Government of India, Jaitley said that in addition to the data available, further evidence is required to build a strong case. With the names of both Ambani brothers on paper, it would be interesting to see if the government chooses to investigate them. The Government of India has already launched approximately 60 prosecutions to apparently retrieve untaxed sums stashed away in foreign banks. Will the ruling dispensation, however, launch an investigation into its biggest financial benefactors?