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Knowledge of black bucks stashed by industrialists, politicians, officials, bureaucrats in the safe havens of Swiss bank has been a permanent fixation for the Indian mind. Not long ago BJP leader LK Advani fired a salvo at prime minister Manmohan Singh accusing him of doing precious little to get this money back.
Singh responded after elections and said that efforts were underway to get it back. Today however the said efforts were put to naught as the Swiss authorities have categorically asked the Indian government to keep off quoting Swiss law and even OECD's Model Tax Convention which does not permit fishing expeditions, in other words, the indiscriminate trawling through bank accounts in the hope of finding something interesting.
This assumes significance as Swiss banks have turned over client details to the US, but have categorically said that India was not welcome there on a name-fishing expedition.
According to reports this would mean that India cannot simply throw its telephone book at Switzerland and ask if any of these people have a bank account here, a top official at Swiss Bankers Association said from Basel. The secrecy shield provided by Swiss banks have always been a big issue in India.
This is also a little surprising on the other count as the Swiss authorities had buckled to US pressure and other troubled economies and had assured that the Swiss government would cooperate in international tax investigations, breaking with its long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars. Austria and Luxembourg had also said they would help.
It was thereafter concluded that wealthy individuals and companies would no longer be able to hide their riches in Zurich's bank accounts. Against the background of the financial crisis, international cooperation has grown stronger, especially against tax crimes, Swiss president Hans-Rudolf Merz had recently commented. The decision indeed must have been a hard one for the Swiss who are renowned for their discretion that has long attracted the wealth of famous foreigners, corrupt people as well as refugees fleeing political or religious persecution.
Swiss banks hold an estimated $2 trillion of foreign money, and financial services account for about 12% of the country's GDP. According to the Boston Consulting Group, those holdings amount to one-fourth of the world's foreign-owned assets. The famed numbered accounts that do not bear the owner's name will still be available for clients willing to pay for added anonymity. But the government will now be able to demand account holders' identities in cases of suspected wrongdoing, and to share that information with foreign authorities.
Switzerland's move comes ahead of a meeting next month in which world powers will discuss stepping up their fight against tax cheats. The greatest pressure has been on Switzerland, which has been embroiled in a dispute with the US over wealthy Americans who have stashed their money in its biggest bank, UBS AG.
Seeking to avoid being blacklisted as uncooperative tax havens, other countries have also announced plans to open their books to foreign tax inspectors. Austria and Luxembourg said on Friday that they would offer more help on tax investigations. Over the past month, leaders have made similar promises in Singapore, Liechtenstein, Bermuda, the British islands of Jersey and Guernsey, and tiny Andorra on the border between France and Spain.
The move comes as a fillip to British Prime Minister Gordon Brown's attempts to clamp down on tax havens at next month's G20 meeting.
Recently Finance minister Pranab Mukherjee had informed the Parliament that the government was committed to unearthing black money within and outside the country. "Swiss authorities, I am told, have agreed for negotiations (on the issue)... We have already taken it (the issue of black money) not only with Swiss authorities but other nations as well," Mukherjee said. Last week only, the US had reached an agreement with Switzerland, under which top Swiss bank UBS AG turned over details of 4,450 secret accounts to the Internal Revenue Service.
Indian efforts however, blissfully for some, stand stonewalled for now and the black bucks are not coming home.
