2G case: CBI says it is not opposed to Balwa’s release on bail

Special public prosecutor UU Lalit said the charges framed against Shahid Usman Balwa are similar to those against co-accused and Swan Telecom director Vinod Goenka, who has been granted bail by the Supreme Court

New Delhi: The Central Bureau of Investigation (CBI) today told a Delhi court that it would not oppose the bail plea of Swan Telecom promoter Shahid Usman Balwa in the second generation (2G) case keeping in view the Supreme Court and high court orders granting bail to other co-accused in the case, reports PTI.

“As an officer of this court, considering the umbrella charges with individual charges framed against the accused, we are not opposing the bail plea at this juncture in view of the Supreme Court and high court orders,” special public prosecutor UU Lalit told Special CBI judge OP Saini.

He said the charges framed against Mr Balwa are similar to those against co-accused and Swan Telecom director Vinod Goenka, who has been granted bail by the Supreme Court.

Advocate Vijay Aggarwal, appearing for Mr Balwa, said his client is the only private person who is still in judicial custody.

He cited the high court order granting bail to Ms Kanimozhi and four others, to drive home the point that bail is the rule and the court should consider that an accused is innocent until proven guilty.

The court has reserved its order on Mr Balwa’s bail plea for 2:30pm and is likely to hear the arguments on bail plea of former telecom minister A Raja’s ex-private secretary RK Chandolia at 2pm.

Mr Balwa and Mr Chandolia had moved their bail pleas on the ground of parity after the Supreme Court on 23rd November granted bail to five corporate executives—Unitech’s MD Sanjay Chandra, Swan Telecom’s director Vinod Goenka and Reliance Anil Dhirubhai Ambani group’s executives Hari Nair, Gautam Doshi and Surrendra Pipara.

Taking cue from the Supreme Court order, the Delhi High Court yesterday granted bail to DMK MP Kanimozhi, Kalaignar TV MD Sharad Kumar, Bollywood filmmaker Karim Morani and Kusegaon Fruits and Vegetables Pvt Ltd directors Rajiv Aggarwal and Asif Balwa.


Manmohan Singh want tax havens banned, can he do it?

This could be a major step if the Indian government is serious about taking on the issue of corruption and recovering stolen assets parked abroad

As on date, we as people living in a law-abiding country otherwise considered to be a world class example in democratic rule with transparency as one of the pillars. We are not aware about who really owns amongst our biggest private airlines, shipping lines, airports, seaports, real estate companies, telecom operators, media houses, payment processors, processed food companies and other such beneficiaries. This is in the era of market forces and liberalisation, which are thrust on us in the last couple of decades. Start digging, and beyond the front-facing directors and CEOs, you come up against a wall of secrecy—which starts and then goes no further. All secrets hidden and well and truly locked away in what are known as “tax havens”, where lie billions of dollars and euros worth of assets. The assets are sometimes stolen or illegal, and are waiting to be re-invested in India as the famous ‘FDI’ or “Foreign Direct Investment”.

Broadly speaking, this situation came about and then exploded in the last 10-15 years, because the rich—sudden wealth—class first stole blatantly to the best of their abilities. Nothing was sacred, narcotics, counterfeit currency, illegal mining, fodder, the works especially, public works. They were able to ‘persuade’ the law-makers who also increasingly are part of the same sudden wealth class, to make tax laws accordingly. This worked well for a while, since a trickle down effect took the aspiring middle class along, too.  But now with huge inflation and increase in cost of living staring the same middle class in the face, it is time to place some correctives to get the stolen assets back. It is time to fix the larger issues, in particular, the thefts in the first case.

One of the most important events, out of the many steps, proposed to be taken at the Group of Twenty (G20) meet in Cannes, France, therefore, has to do with the way the Indian prime minister Manmohan Singh spoke strongly in favour of addressing, as well as resolving, the issue of tax havens. This is, without doubt, a major step, if the Indian government is serious about taking on the issue of corruption and recovering stolen assets parked abroad. How much support they get from within the Indian system as well as the rest of the world remains to be seen. But the official Indian position has now been declared in no uncertain terms, and on a local Indian front. We can certainly expect more raids and investigations on people and corporates with funds parked in secret accounts abroad in the near term. On an international front, as one of the largest client countries for tax havens, a declared position of this sort will certainly cause more than a few flutters.

The Central Board of Direct Taxes (CBDT) now has a separate directorate under it to look further into this issue and that amongst the earliest investigations involve about 800 such accounts held by Indians in tax havens abroad through just one branch of HSBC Bank. It is obvious that there is much more that will be revealed in the coming days. That the Government of India may be using professional help for the same bunch of ‘consultants’ who set up the secret accounts in these tax havens in the first case makes it all the more interesting. This writer knows more than a few people who are aware of this situation. Set a crook to catch a crook, great, has been done before too, but for sure, there are more than a few very rich people in India taking a closer look at their investment consultants. These are the sort who helped them set up those ‘secret’ accounts in tax havens in the first case.

That’s when you learn Rule # 1 of dealing with tax havens—their biggest source of income is usually from funds that have been ‘frozen’, for one reason or the other.
But what is a tax haven, how do they work, and which are the biggest tax havens in the world?

For decades now, popular lore and repetitive shallow media reports have placed Switzerland as the end all and be all of secret tax free accounts. No doubt, Switzerland does have a long track record of going back centuries in this business, but over the last few decades it has been losing its prominence and credibility. As on date, there are over 25 tax havens available for people who wish to park their funds in secret accounts. Almost all of them have representatives and ‘consultants’ in India, who will assist in setting them up, without leaving the country if so desired. But Switzerland is no longer in the dominant position it used to be in.  One reason, of course, is competition from different ‘parent’ countries. People are comfortable with tax jurisdictions where their parent countries have ‘agreements’ made by rich law-makers for rich people. An example in this case is Mauritius with India. Similar examples include Macau and Hong Kong for China, Delaware for the US, Multiple Commonwealth islands like Isle of Man, Caymans, Monaco and Luxembourg for the Europeans. Even Mongolia is joining up through an office in Singapore. In otherwise open economies like Holland and Belgium, there are helpful tax jurisdictions within the system itself, for those who need them.

Another reason for Switzerland losing its prime position is the growing sense of mistrust. Delayed or non-return of secret funds parked in Switzerland, before and during World War II, to the descendants and heirs of millions of Jews ,and others who died during the Holocaust, or fled after WW-II, is one highly publicised cause for concern. The recent disclosure of details otherwise considered top-secret by WikiLeaks, has shaken the gnomes, as well as, their clients. Since real numbers for this sort of business are impossible to come by, even a guess can not be hazarded on who are the biggest. But the fact that more and more jurisdictions are getting into the business can only mean there is not just room for more.

(This is first part of a two-part series)

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Nagesh Kini FCA

5 years ago

Post-liberalization a lot of laundered money came home from tax havens and Mauritius and the Govt.was ga-ga about it and winked at it too. Now the PM wakes up after giving all the offenders to move their stashed funds elsewhere.
Indian black money where ever lying needs to be hounded out. Like the UK-Swiss Treaty it has to be retrospective to access this data, or else nothing will come to light.

Vinay Joshi

5 years ago

Dear Veeresh &
Dear Ms. Sucheta,

No doubt an important a sub raised, tho' its only first part ot the article.

Irrespective "TAX HEAVENS" are notified as 'DTAT' - avoidance of double taxation.

Right! if i'm not mistaken! [correct me.]

Now, DTAT - is a law ratified by the parliament - just like other tax laws?

When has the parliament with the Presidential ascent has clubbed it with the Income Tax Act? Any answer!

Simple question - what is the legal validity of DTAT?
What had happened to P/Notes?

I.ve appreciated the mute point PM wants TxH banned!?




In Reply to Vinay Joshi 5 years ago

Dear Vinay Joshi ji,

Thank you for writing in.

On P-Notes, I found this article also of interest:-

On legalities of DTAT your queries are very valid, and shall be addressed in another article, as some aspects appear to be playing out currently.

Once again, thank you for writing in.


25 companies call-off IPOs due to sluggish market conditions

“The bad mood of capital markets has led 25 companies to call off their IPOs during the 2011 calendar year. The probable amount that these companies were planning to raise was to an aggregate of Rs31,000 crore,” brokerage firm SMC Global Securities said in a report

New Delhi: Owing to a sluggish trend in the stock market, at least 25 companies have called off their initial public offer (IPO) plans so far in 2011, reports PTI.

Mostly from the real estate and power sectors, these 25 IPOs were together estimated to raise about Rs31,000 crore worth capital to fund the companies’ business expansion plans.

The BSE benchmark Sensex has lost more than 23% since the beginning of 2011 and hit its 52-week low of 15,478.69 on 23 November 2011.

“The bad mood of capital markets has led 25 companies to call off their IPOs during the 2011 calendar year. The probable amount that these companies were planning to raise was to an aggregate of Rs31,000 crore,” brokerage firm SMC Global Securities said in a report.

Even after getting approval from market regulator Securities and Exchange Board of India (SEBI), these companies could not launch their IPOs within the valid period of one year from the date of approval, mainly on account of the ongoing turmoil in the capital markets.

These 25 companies having cancelled their IPOs included a host of the real estate players, such as Lodha Developers, Ambiance Real Estate, Kumar Urban Developers, Neptune Developers, BPTP, Raheja Universal and Lavasa Corporation.

Besides, a number of power sector companies, such as Sterlite Energy, Jindal Power, Avantha Power and Ind Bharat Power Infra, have also called off their IPO plans.

Also, the government’s disinvestment programme to bring public issues of several blue-chip PSUs couldn’t take off.

“If the government is not getting enough confidence to bring FPO (follow-on public offer) for ONGC, how will the promoters of any smaller companies stick their necks out? This is surely impacting the confidence of the promoters of the smaller companies,” SMC said.

Besides, a few companies such as Micromax have already announced IPO deferrals even though approval for SEBI validity still remains.

There are at least 10 companies who have valid approval from the market watchdog and are left with just two months in their validity period of one year from the date of SEBI approval like Pride Hotels, Tara Jewels.

SMC said that the cancellation of IPOs could impact the companies’ ability to raise capital to finance their expansion projects, which could eventually result in a slowdown in capacity building and job creation.

It also noted that the trend in the IPO market may lead to panic in the minds of the private equity (PE) funds, as they would be unable to exit from their investments.

The PE funds generally invest in unlisted companies in the hope of a later exit through IPOs.


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