Sharad C. Misra*

Although corruption continues to afflict the nation like cancer, whose cells have proliferated, affecting all the vitals of the polity, the Central Government does not seem to be serious enough to take on this deadly scourge on a war footing. Corruption was the major election issue, both on the agenda of the Congress party as well as of the BJP. Lately, the Government has disclosed that it had approached Switzerland, harbouring the largest tax havens in the world, to seek details of the bank accounts of Indian nationals, while the Finance Minister, Mr. Pranab Mukherjee, reassured Parliament that the government was committed to unearthing black money ‘within and outside the country.’ The Prime Minister too in his recent address to the CBI, anticorruption departments of states and vigilance agencies emphasized the need and urgency of combating corruption, specially at high-levels not sparing the ‘big fish’. The Chief Justice of India, on his part, even favoured a statutory provision for seizure of illegal properties and assets of government officials convicted in corruption cases. But none has uttered a word on dealing with the corrupt politicians and law-makers at the helm !

The question of black money parked in tax havens specially in Swiss banks, was discussed with great concern in the last meeting of the G-20 countries in the context of global recession. Under pressure from all the developed countries, the Organization of Economic Cooperation and Development (OECD) reached an agreement with the Swiss government, setting out rules for passing on information on offshore tax evaders. The OECD blacklisted a large number of countries sheltering tax havens and threatened them with punitive sanctions and international isolation. The threats worked and the Swiss banks relented by agreeing to disclose identities of tax-evading depositors, but on a ‘case to case basis’. Because of its status of a super power and determined efforts, America was able to reach an agreement with UBS AG, the largest private bank in Switzerland, to disclose details of 4,450 secret accounts to its Internal Revenue Service. This was the first lot of more than 50,000 secret accounts of Americans for which disclosures were sought and possibly, the details of more accounts may follow, judging by the way America is doggedly pursuing the matter.

In the case of India, while promises and assurances are galore, no pro-active drive has been launched, even though full support of the G-20 countries and OECD is available. The popular perception is that Swiss banks continue to be the preferred depositories of ill- gotten wealth of corrupt politicians, industrialists, share-brokers etc., who are influencing the Government not to pursue the matter. The Government, on its part, also apparently fears that disclosure of the identities of highly placed tax-evaders would trigger a massive upheaval that could destabilize it. Aware of India’s predicament, the Swiss banks have arrogantly cautioned India against going on a ‘fishing expedition’ to get details of tax-evaders and if it ventured to do so, it would only be disappointed! When asked by the newsmen for his reaction Mr. Pranab Mukherjee said that he would look into the matter. Later, in an interview telecast by a TV channel, he disclosed that he had discussed the matter with the Swiss authorities and it was decided to start negotiations on it in December this year.

The Government ‘s reluctance to take the bull of corruption by the horns is a well known fact. For instance, it has still not made public the names of Indian tax-evaders and details of their funds parked in Liechtenstein’s LTG Bank, even though the information has been received by it. Further, India has still not ratified the United Nations Convention against Corruption (UNCAC) adopted by the General Assembly, on December 31, 2003 (Resolution 54/4), even though it was signed on December 9, 2005. The Convention provides for measures on Prevention, Criminalization, International Cooperation and Asset Recovery. In particular, Article 51 of the Convention provides for return of assets to countries of origin. Already, as of May 2009, 136 countries have signed and ratified the convention, it including our neighbouring countries like Sri Lanka, Pakistan and Bangladesh!

In response to a Right to Information Act (RTA) enquiry, the Chief Vigilance Commission (CVC) disclosed that it had, in June 2008, sent a note to the Cabinet Secretary for ratification of the UNCAC, outlining a summary of the Convention and urging on him the need to take necessary steps towards ratification. This note was routinely forwarded to other Ministries for their comments, but it is not known if they have all responded. The reasons for India not yet ratifying the Convention were ascertained from the nodal Ministry concerned (Ministry of Personnel and Training, Govt. of India) through an RTA enquiry. The relevant extract of the Ministry’s reply dated March 3, 2009 explaining the delay is quoted below.

“The UNCAC requires the state parties to bring the relevant domestic legislation in line with the provisions of UN Convention against Corruption before ratifying. The process of considering amendments to relevant acts/rules/regulations etc. administered by the various Ministries/ Departments requires compliance of due legal and procedural process and involves consultations with various Ministries/Departments administering the relevant acts/rules/regulations relating to Anti-corruption and other related issues. The process is presently on and Central Vigilance Commission is one of the organizations which is consulted.”

It is not clear as to when the process would be completed since more than three and a half years have already passed after the Convention was signed by India. Interestingly, Switzerland too like India has not ratified the Convention, but for a different reason. It suits Switzerland’s national interests to amass foreign wealth and earn service charges and other dues, while it suits India not to press too hard for disclosure of deposits of Indian tax-evaders, fearing that it might trigger a political earthquake more devastating than a hundred Bofors. We are also reproducing here the essence of Mr. Sharad Misra ’s correspondence with the authorities under the Right to Information Act as it throws an interesting light on the Central Government’s reticence on the sensitive issue of ratification of the UN Convention against corruption.


* Mr. Sharad C. Misra is a political commentator writing on a variety of subjects of national importance. Basically a
development economist, he held important positions in the Government and later joined the United Nations
Organization as Technical Assitance Advisor.

July - September, 2009