Scaling new heights

The Times of India has set a new standard as far as pragmatism goes. Just when you think they have extinguished all possible avenues, they manage to invent new ones. This is today’s edit

Switzerland has long been a secret treasure chest for much of the world’s offshore wealth. Its banks including financial giants UBS and Credit Suisse offer clients privacy and personalised service. But the discretion it treats as brand value is also associated with suspicious opacity. Swiss banks have a point in saying their contracts with clients are based on the promise of privacy. So, disclosures-on-demand are a breach of trust, so important in their trade. But client confidentiality is valid only so far as account-holders’ assets accrue from legitimate activity. That indulgence can hardly be extended to law-breakers seeking tax havens or places to park illegal assets.

Nor should confidentiality mean stonewalling of regulatory scrutiny into tax fraud, diversion of embezzled funds, money laundering and other illicit activity.


By fetishising banking secrecy, Switzerland runs the risk of appearing to side with the bad guys. Banks should maintain secrecy as required by professional norms but also consent to providing client data to regulatory authorities or criminal investigators. That may be the way out of this impasse.

When principles becomes fetishes, anything goes.

Throughout history, governments have been the biggest murderers, rapists and law breakers, ever, and have killed, raped and plundered more people than all the criminals in the world put together. And, therefore, any case of “regulation” should be taken with more than a pinch of salt. Should banks like UBS provide information only to countries like the US and India, or should they also “comply” with the regulations of countries like Zimbabwe. If Mugabe imposes 100% wealth and income taxes on all “rich” people (don’t know if he has) and they rush to keep their money in Swiss banks, should a UBS then be accused of “fetishising” secrecy?

Philosophically, taxation as practiced in the world today is similar to highway robbery; in both cases a gun is held to your head and you are asked to pay up or face the “consequences.” Indira Gandhi once had a 97.5% marginal income tax rate – if you earned more than (middle class) subsistence level incomes, you essentially had to hand the entire amount over to the government. The stupidity ended years later, and it was during Chidambaram’s dream budget and the grudging acknowledgment of the “Laffer curve” phenomenon that the present day 30% marginal rate (excluding various surcharges and cesses) came into being. Governments have no moral right to impose any kind of taxes, or demand that citizens report all their activities – financial or otherwise – to them. The “transparency” they seek is because such “tax havens” prevent them from engaging in egalitarian wealth “redistribution.” No wonder people make heavy use of every loophole available in tax laws as also destinations like Switzerland and the Cayman Islands. Why do you think accountants and tax lawyers exist and earn handsome fees? Further, as far as I am concerned, terrorism is a bogey that governments are using to eliminate the few liberties that individuals have left. If banking secrecy “enables” terrorism, so does the internet, telephones, letters, homing pigeons, government bureaucrats, and politicians. Why not reverse the presumption of innocence principle on all of them?

The Times probably knows its audience – most people will simply drink in everything it writes, and the politicians will politely acknowledge its presence, but a lot of people do exist who have memories that last beyond today’s edition. And that is why today’s edit comes as a surprise. If you remember, the Times Group was once a victim of the dreaded Enforcement Directorate (they picked up the name from the KGB it seems) that falls under the Ministry of Finance. The case dates back to 1997, the finance minister was – Chidambaram – and the victim was Ashok Jain, the father of the present owners of the group; swiss banks and foreign exchange regulation violations were involved. Read this article for a summary of what happened, and try this google search if you want to know more. The poor man died after the ED hounded him for more than a year. The bureaucrats who did the hounding were later arrested on charges of extortion and blackmail-

In his three-year stint at the ED, Aggarwal allegedly intimidated a swathe of bigwigs. Some of his cases in which harassment charges have surfaced include Ashok Jain. The late chairman of Bennett, Coleman and Co. Ltd, publishers of The Times of India Group of newspapers, Jain fell victim to Aggarwal’s ploy after an ed raid on his house in January 1997 in which some visiting cards of Swiss bankers were found. Using it as the trump card, Aggarwal hounded Jain, a heart patient, for two years, with summons and threats, until the press baron had a fatal cardiac failure.

For anyone who is familiar with the workings of the normal face of the MoF, the Income Tax department – if you are just a salaried person filing your tax returns, you don’t know how it works – this is not a surprise. They can slaughter you – make you pay though the nose even if you are not at fault. And the same is true in the US.

Did the Times suffer from amnesia when it wrote this edit? It probably did. But then, these are dangerous times when dissent is equated with crime. So, maybe, amnesia is a good idea.

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