Black money paranoia

Published : Aug 26, 2011 00:00 IST

THE government's lukewarm response to the demand for an effective Lokpal Bill is of a piece with its paranoid reaction to the Supreme Court's directive on June 4 constituting a Special Investigation Team to investigate the allegations against certain tax evaders and to take appropriate steps to bring back the money stashed in foreign banks.

It was in response to the government's admission that its investigation has been rather slow that the Bench, comprising Justice Sudarshan Reddy, who retired on July 8, and Justice Surinder Singh Nijjar, expanded a 10-member High Level Committee (HLC), comprising senior officials, set up by the Central government into a Special Investigation Team. The team is to be headed by two former Supreme Court judges, Justice B.P. Jeevan Reddy (as Chairman) and Justice M.B. Shah as Vice-Chairman. The Bench directed the SIT to report and be responsible to the court. As the government-appointed HLC did not inspire confidence, the court found it necessary to constitute an SIT by adding two retired judges to the HLC and make it answerable to the court. The court's action is not unprecedented as it has resorted to this type of investigation before to unravel offences of a complex nature when the government's efforts to bring out the truth were found wanting.

Instead of cooperating with the Supreme Court in this endeavour, the government filed a review petition on July 15 and sought recall of its July 4 order on the basis of its fundamental objections to the court's intervention, even though it did not raise them during the hearing of the case Ram Jethmalani vs Union of India. The government claimed that the court's order encroached upon the turf of the executive.

The government revealed its discomfort over the first 20 paragraphs of the judgment, which constituted a stringent critique of the neoliberal economic ideology pursued by the Centre in the past 20 years. While there could be two opinions whether the July 4 judgment should have carried these paragraphs on ideology, the government's objection to these on the grounds that the court made these observations without hearing it or without any material before it has surprised observers. The court could not have been expected to hear arguments on this, as it only provides a factual background to its decision.

However, these very paragraphs suggest a clear link among the paradigm of governance prioritising the market, weak tax collection machinery and a decline in the State's revenues. In Paragraph 17, the Bench warns that if the state were soft to a large extent, especially in terms of the unholy nexus among the lawmakers, the law-keepers and the law-breakers, the moral authority and the moral incentives to exercise suitable control over the economy and society would vanish. Large unaccounted monies are generally an indication of that, the court explained.

Critics of the court's intervention have suggested that it is an instance of judicial overreach. In Paragraph 43, the Bench noted that the Centre opposed the SIT but provides no principle as to why that would be undesirable, especially in the light of the many lapses and lacunae in its actions in these matters over the past four years. The Bench clearly identified the problem as one of fragmentation of government and expertise and knowledge across many departments, agencies and across various jurisdictions, which posed a serious impediment to proper investigation. Considering that the rule of law and achievement of constitutional values of good governance were at stake in this case, the Bench found it necessary to be involved in a broad oversight capacity through the SIT.

The petitioners had sought the court's direction to the Centre to disclose documents relating to bank accounts of Indian citizens in the Principality of Liechtenstein, a small landlocked sovereign nation-state in Europe and a tax haven. A former employee of a bank in Liechtenstein secured the names of some 1,400 bank account holders, along with the particulars of such accounts, and offered the information to Germany. On the basis of this information, Germany initiated action against some 600 individuals and offered the information regarding nationals of other countries who held similar accounts.

The Bench directed the Centre to disclose information secured from Germany with regard to individuals against whom evidence of wrongdoing was available, show-cause notices had been issued, or proceedings had been initiated. The government's decision to challenge this direction through the review petition only raises questions about its commitment to deal effectively with corruption.

V. Venkatesan
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