Black money probe shifts focus to stock market operations

07 May 2014

India's probe into black money stashed away in some of the banks in safe havens such as Switzerland has now shifted focus to stock market dealings of over 100 entities, even as the finance minister insists that he is stepping up pressure on Switzerland to get details of suspected tax evaders having bank accounts in the European nation.

Reports quoting official sources said a discreet probe is underway of the stock market dealings of over 100 entities linked to these cases to detect possible re-routing of black money.

Those under the lens include individuals whose names figure in a list of over 700 Swiss bank account holders, as also the bankers and associates related to certain banks and their Switzerland-based branches.

Investigators are also probing some 10-15 listed Indian companies, including a few blue-chip ones, directly or indirectly linked to these banks and their Indian customers for suspected market manipulations.

It is feared that the illicit wealth is ploughed back to the economy through the stock markets, by using complex fund structures of certain overseas funds, including those floated by select European banking giants, it was pointed out.

Official said the operators have used a few large global banks to recycle illicit money, adding that it is not known whether the banks themselves are aware of the illicit activities or these are being carried out by their executives for the benefit of clients.

However, these bankers are suspected to have first convinced their clients to move their funds to non-Swiss locations like Singapore, Dubai and London before any transmission to India, to avoid regulatory and intelligence agency oversight.

The official also pointed out that with jurisdictions like Mauritius and Cyprus becoming suspect, bankers are opting for some new routes.

The official, however, refused to disclose the names of these individuals, banks or the listed companies under the scanner, saying that disclosure of further details at this moment may jeopardise further investigations.

India has strongly objected to Switzerland's denial of information about account details of certain Indians at HSBC's Swiss bank branches (See: Chidambaram slams Switzerland for non-cooperation over Swiss bank accounts of Indians).

Switzerland, which has long been a major safe haven for alleged black money, had somewhat opened under pressure from the United States and the European Union, but is not yet ready to ease its strong banking secrecy laws for India.

Switzerland had, in recent years, signed an agreement with India to ease its banking secrecy laws and has also signed a revised tax treaty with India in 2011 to facilitate greater flow of information about alleged black money.

Finance minister P Chidambaram, meanwhile, said Switzerland was putting unusual pre-conditions for sharing information, which appear to be "intended to refuse assistance" and for providing protection to the people "found to have evaded Indian taxes".

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