Swiss bank: The Big Lie!

Published: Wed, 05/06/2009 - 11:43 Updated: Thu, 05/14/2009 - 07:03

<p>Swiss authorities claim that the Indian government submitted "forged" documents in the $8 billion Hassan Ali case. Has finance ministry lied to the Supreme Court?<br /><br />Exclusive report By Sanjay Kapoor Berne/New Delhi<br /><br /><strong>Someone is</strong> not telling the truth. Is it the Union finance ministry of the UPA government in Delhi, performing its last tango, caught in what is clearly a 'Swiss Bank Tangle'? <br /><br />Last week in the Supreme Court, the central government's solicitor, responding to a Public Interest Litigation (PIL) that demanded government's action on retrieving Indian black money stashed in Swiss banks, had given the names of three Indians and how the agencies were following up on their case.<br /><br />In a 29-page affidavit, the government had detailed the action it had taken against Pune-based stud farm owner, Hassan Ali Khan, his wife Rheema and Kolkata-based businessman, Kashi Nath Tapuria, who allegedly were holding $8 billion in an UBS account in Switzerland.<br /><br />The Enforcement Directorate (ED), on its part, has issued a show cause notice to Khan for contravention of Foreign Exchange Management Act, 1999 after it found out during a raid in January 2007 that Khan had deposited around 8 billion dollars at the UBS Bank. The Income Tax department has raised a total demand of Rs 71,848.59 crore against Khan, his wife Rheema and other associates. Investigations so far have revealed overseas bank accounts of Kashi Nath Tapuria and his wife. The ED has seized their passports.</p>
<p><em>Hardnews</em> travelled to Switzerland to chase a story on the Indian black money and Swiss Bank transparency issue, and learnt to its surprise that there was a manifest truth deficit on this issue. The most scandalous was the assertion by the Swiss justice ministry on the celebrated case of the mysterious Hassan Ali Khan and his account in Switzerland. In a communication from Folco Galli, Information chief of <em>Eidgen&ouml;ssisches Justiz-und Polizeidepartement</em> (EJPD) <em>Bundesamt f&uuml;r Justiz </em>(Swiss Department of Justice and Police) BJ, Berne, <em>Hardnews</em> was informed that the Indian authorities submitted "forged" documents to seek assistance on the Hassan Ali Khan case. Galli's reply to <em>Hardnews</em> on this case is precise and direct and does not need any interpretation. Galli talks about $ 6 billion and not $ 8 billion as it is made out to be. Here is his categorical reply:<br /><br />"<em>In January 2007, Indian authorities have submitted in the case of Hassan Ali Khan a request for legal assistance to the Federal Office of Justice (FoJ)... In the same month, the FoJ informed the Indian authorities as follows: Concerning the presumed transfer of 6 billion USD, domestic inquiry has revealed that <strong>the banking information provided with the request for legal assistance are forged documents.</strong> Accordingly, the supposed transfer to UBS accounts <strong>has no reality.</strong></em></p>
<p><em>Concerning the request Swiss authorities need some specification in order to be able to examine and possibly to accept and execute it: </em></p>
<p>- <em>a confirmation that the Indian investigation is a criminal one (no tax or related investigation)<br />- a better description of the predicate offences which are object of the Indian money laundering investigation<br />- to show the relation between the predicate offences and the accounts in Switzerland... In March 2007, the Indian Embassy submitted some complements to the FoJ.</em><em></em></p>
<p><em>In April 2007, the FoJ informed the Embassy that the complements don't include the necessary specification. Without these information, Swiss authorities can't examine whether the conditions to grant legal assistance are fulfilled or not. Indian authorities haven't submitted the necessary specification so far."<br /></em><br />To reiterate, Galli says the following: first, the documents that were given by Indian authorities were<strong><em> forged</em></strong> and, therefore, the transfer of Indian funds to UBS accounts "<strong><em>has no reality"</em></strong>. Swiss authorities want to provide further assistance in that case if the Indian authorities could satisfy the Swiss government's demand to establish dual criminality - what is crime in India is a crime in Switzerland. The Swiss also wanted to know whether Khan's offence was an object of Indian money laundering. Since April 2007, Indian government has not responded to Swiss authorities on this issue. <br /><br />Interestingly, Supreme Court, too, had asked why the Indian government had not slapped money laundering charges against Khan and Tapuria. <br /><br />Galli, in his communication, also informs that most requests for legal assistance come from neighbouring and other European states. "The Indian authorities submit only a few requests per year to Switzerland." Galli did not elaborate on the quality of these requests and what came of them.<br /><br />This is not the first time that the Swiss had problems with Indian documentation. Even in the Bofors case, Swiss courts had refused to entertain some of the documents as they were illegible. <strong><em>The moot question is: were forged documents created deliberately to prevent transfer of funds to India or the account does not exist at all?</em></strong><br /><br />Galli's answer does not preclude the possibility of such an account as he expects the Indian government to furnish more authentic details to take the probe further. Evidence that the account may exist lies in the huge fine that has been imposed by income tax authorities on Khan and his associates. The question is: <em>who are behind this charade?</em><br /><br />It seems that the UBS managed to convince the Reserve Bank of India (RBI) of their integrity, which had put their license on hold for retail banking in India claiming lack of cooperation in tracking Hassan Ali Khan's money trail. The ED that looks into foreign exchange related crimes gave the clearance seemingly after giving credibility to Swiss government claims. It is reasonable to infer that both the ED and Swiss Bank were on the same page on the quality of evidence against Khan. Earlier, Swiss Bankers' Association president Pierre G Mirabaud, during a visit to India last year, had put the onus of getting to the truth on Khan's money trail on New Delhi.<br /><br />Another aspect investigated by <em>Hardnews</em> was how much of Indian funds are stashed in the Swiss banks. Is it really Rs 70 lakh crore as claimed by BJP's prime ministerial candidate or is it less? It was important to get an official view from the Swiss Bankers' Association and square it with all the figures bandied around in India. <br /><br />The Swiss Bankers' Association Communication Director, James Nason, told <em>Hardnews</em> in Berne about the money held in their accounts. The Swiss National Bank, Nason stated, comes out with details of bonds and securities held in custody account in Switzerland. At the end of 2008, the total was 3,822 billion CHF (Swiss Frank = Rs 43). Out of this, 2,190 billion CHF was of foreign entities that included the government, institutional and private etc. Indians had 4,306 million CHF liabilities; this includes both the custody and fiduciary accounts. China, on the other hand, had 15,650 million&nbsp;CHF alone in custody account. Nason reiterates that all of this is not "private money", it could be government, institutional or whatever.<br /><br />Those who know the ways of Swiss banking like the author of the celebrated book on Swiss banking, (<em>Switzerland - a rogue state</em>?) Viktor Parma, claims that the banks in his country do not give information readily and are good at buying time. They were forced to yield to US demands under President Barack Obama as it enjoys a privileged position. The big question is: will the Swiss treat India, even if LK Advani becomes the prime minister and chases these funds, with some amount of respect?<br /><br />Sanjay Kapoor is the Editor of <em>Hardnews </em>monthly magazine and the author of <em>Bad Money Bad Politics</em> - <em>The untold Hawala story</em>.</p>
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<p>Related stories: <a href="http://www.hardnewsmedia.com/2009/05/2899">Advani's claim: It doesn't add up</a></p>
<p><a href="http://www.hardnewsmedia.com/2009/05/2897">Funny money, not so funny</a></p>
<p><a href="http://www.hardnewsmedia.com/2009/05/2900">Who will bell the cat?</a></p>
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Swiss authorities claim that the Indian government submitted “forged” documents in the $8 billion Hassan Ali case.
Exclusive report By Sanjay Kapoor Berne/New Delhi

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