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Black money probe receives new name

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Neo Corp logo
Neo Corp logo

By NewsGram Staff Writer

Switzerland said on Tuesday that it has received a request for information on Neo Corp International Ltd, an Indore- based textiles firm, on suspected black money cases which are being investigated by tax authorities in India.

Neo Corp had already faced income tax searches on its various premises earlier in February for alleged tax evasion. Having started out as a small woven sack maker in 1985, the company now claims to be a multinational technical textiles group.

As part of India’s crackdown against suspected black money stashed in Swiss bank accounts, the country has sought details from Switzerland about numerous individuals and companies. This was carried out as a part of India’s bilateral treaty with Switzerland for administrative assistance and exchange of information.
A series of such Indian names have been published in the official gazette of the Swiss government about whom the tax authorities in India have sought information. Many other requests are pending as the Swiss authorities conduct their own examinations of the same before sharing information.
The notification about the concerned entity’s right to appeal is generally the first step in the information exchange process. This is typically seen as the Swiss government’s in-principle agreeing to share the information.

 

As per their local laws, Neo Corp will have 30 days to appeal against “administrative assistance” by the Swiss federal tax administration, the notification stated.

 

The notification stated that the appeal needed to be filed before the Swiss federal administrative court along with reasons and evidence for the same; it gave February 15, 1985 as the date of incorporation.

 

However, in a regulatory filing to the BSE earlier in May, Neo Corp had said that it was cooperating with the tax authorities and that a search had been conducted on February 27, 2015 on the company, its group companies, directors and key officials.

 

“The company is in the process of collating and responding to all the queries raised by the income tax authorities and the company is lending its fullest co-operation to the department in completing the enquiry. It is to put on record that no incriminating documents or undisclosed income was found as far as Neo Corp and its group companies are concerned,” the BSE filing on May 22 stated.

 

Though Neo Corp is listed on the BSE, its shares have been falling sharply for the past few days. The company claims to be present in over 28 countries and commands a market value of Rs 134 crore. It posted a revenue of Rs 744 crore and a net profit of Rs 30 crore in the latest fiscal.

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Political Climate Accused Of Encouraging The Promotion Of Black Money

There is a third reason why people who are tracking black money should not be looking at Swiss Banks

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Political Climate Accused Of Encouraging The Promotion Of Black Money. Pixabay

Last week, the political climate was charged with accusations that the government had actually begun encouraging the promotion of black money. Prima facie, the charges seemed to have some merit in them. Swiss bank deposits from India had swelled by 50%, one of the largest increases in recent times. But the accusation was a bit uncharitable. For three specific reasons.

First, even though the percentages seem high, the total amounts involved in Indian deposits with Swiss banks are not. At CHF 1.02 billion – even after accounting for the 50% jump – the amount is significantly lower than the CHF 6.46 billion in 2006 when the UPA was in power. In fact, Indian deposits with Swiss banks had been declining for the past three years – right from 2014 when Prime Minister Modi formed his government. It was only last year that the trend was broken and Swiss deposits began climbing again.

The second reason was that Indian deposits with Swiss banks account for just 0.07% of global deposits with Swiss Banks. That is one of the lowest levels ever during the last decade, overshadowed by an even lower share of 0.05% in 2017. At such percentages, India’s deposits with Swiss Banks are not much to rant and rail about.

There is a third reason why people who are tracking black money should not be looking at Swiss Banks. True, they were the best shelter for clandestine money in the past. But Switzerland has entered into several bilateral treaties for making disclosures about bank deposits to requesting states. That includes a treaty with India to provide real-time information with regard to Indians from January 2019. Obviously, any Indian who wants to stash away black money will not do so with Swiss Banks, because he would stand exposed.

There could, thus, be one credible explanation for the quantum of deposits in Swiss Banks going up. It could be found in the government’s decision to ram through amendments to the Foreign Corrupt Practices Act (FCRA) in March this year.

which seeks to exempt political parties from disclosing their source of funds from overseas. The courts had earlier demanded that political parties make these disclosures and the government thought it wiser to try and change the law instead. This move is now being challenged before the Supreme Court as being unconstitutional by public spirited persons like EAS Sarma. The decision of the court is still awaited. The amendment to the FCRA technically permits politically connected parties to put their money back with Swiss  Banks where it is safer than in tax havens with not-so-unblemished a banking record. If this explanation is correct, one could say that the government, in collusion with all other political parties (all have kept quiet about these amendments), are responsible for the spurt in Swiss deposits.

cartoon showing black money
Cartoon Showing Black money. Flickr

As mentioned in these columns earlier, if people want to look for black money, they should first demand a full fledged investigation into the agriculture income disclosures before the tax authorities during 2011 and 2012. What makes those disclosures horrifying is (a) they were larger than ever before; (b) the cumulative value of disclosures during the two years was a mind-boggling Rs 874 lakh crore (Rs 874 trillion); (c) the cumulative value  of disclosures was eight times India’s GVA for 2013, and almost 100 times the total tax collected in that year.

It can be found in the decision of the enforcement authorities of not auctioning off properties they have seized in the past – irrespective of whether they relate to the NSEL Scam or the politicians who are being investigated for corruption (on extremely narrow charges). Attachment of properties makes for big news, full of sound and fury. But the refusal to auction them off points to collusion.

It can be found in the files of scores of senior officials who were suspended, when fraud was discovered, and then reinstated when public memory died. It can also be found in the files that routinely get burnt in fires that take place at government offices – possibly aimed at making evidence disappear – especially when it comes to corrupt deals and land development scams.

Also read: Punjab’s Aam Aadmi Party and Its Political Self Goals

But these are things politicians do not like to talk about. Many of them are collusive partners in the generation of black money. Their silence in permitting the amendments to the FCRA is ample proof of their willingness to allow a cover-up. The rantings and ravings against Swiss Banks are, therefore, of no consequence. (IANS)