Citizens' Issues
The Indian Flag flies alongside Japan’s at Okayama conference. PMC officials say junket was 'private’.
Never mind the recent furore over official foreign tours by MLAs from Karnataka and Goa, An RTI reveals that Pune’s councillors and officials went on a Japan trip, flouting FCRA norms and model code of conduct. Unfazed, they are contemplating a trip to Indonesia as well

Seventeen officials and corporators of the Pune Municipal Corporation (PMC), led by Pune’s Mayor, Chanchala Korde, conducted a supposedly `private’ tour to Japan between May 24 and May 30. On returning, they hurriedly passed a Standing Commitee resolution (with an approving nod from each and every political party, without exception) for the construction of a fancy 22 km Light Rail Transit (LRT) project from Shivajinagar to Hinjewadi. 
This is allegedly in return for the hospitality extended to them by a Japanese private company called Japan International Co-operation Agency (JICA). The PMC, however, insists that the trip was a private affair. The genesis of this entire episode is in a survey conducted by Toshiba, another Japanese company, two years back for an LRT in Pune, and funded by JICA; the latter is allegedly now all set to clinch the deal for constructing the project.  

Shockingly, the route chosen is also part of the Pune Metro route, but it doesn't seem like anyone cares, as long as the politicians and officials get a free junket and perhaps something more. Scandalous information procured by RTI activist Vijay Kumbhar, who seems to always smell out the rat in every action of the civic body, exposes the `private’ visit theory as a ruse. What is curious, is that a `stranger’ also accompanied the Indian officials on this trip, who is neither a corporator nor a PMC official. PMC refuses to reveal his name.

Besides quickly deciding upon a public project on their return, photographs show national flags of both the parties in the discussions on the table during the conference at Okayama. Which means, the discussion was between the two cities/countries was held in an official capacity. If so, then as per Section 6 of the Foreign Contribution (Regulation) Act (FCRA), 2010, it is mandatory for every government official and member of any political party to file an online application to the FCRA for prior permission. The rule states: “no member of a Legislature or office bearer of a political party or Judge or Government servant or employee of any Corporation or  any other body owned or controlled by the Government shall, while visiting any country or territory outside India, accept, except with the prior permission of the Central Government, any foreign hospitality.” The PMC has not been able to give the required information under RTI and has the arrogance to continue suppressing this vital information.

Also, as per Section 4 of the RTI Act, it is mandatory for the PMC to put up in the public domain, all correspondence/proposals/decisions before commencement of the tour. PMC is keeping mum on this issue and as Kumbhar points out, there can be four theories explaining this trip: “1) Since no official permission was taken from the FCRA, this tour has proved to be illegal. 2) The tour was completely sponsored by the Japanese private company, JICA and was essentially private, but its outcome was the  launch of a public transport system. 3) Perhaps they wanted it to be a private tour but would have faced hurdles getting visas, so they made it an official tour, although JICA may have allegedly sponsored it. 4) Or lastly, since the tour was conducted when the model code of conduct was in force, it stands null and void.’’
Kumbhar has demanded that all information pertaining to this trip be put on the PMC website, because it involves public interest if a public transport system is being executed as a consequence of the trip.

The PMC has time and again flouted all norms, even court decisions, and refused RTI information. It is worth considering, why Municipal Commissioner Vikas Deshmukh and all other political party heads have been silent about this trip?

For any politician or government babu, the following rules apply without exception:
1. As per Section 6 of the Foreign Contribution (Regulation) Act (FCRA), 2010, no member of a Legislature or office bearer of a political party or Judge or Government servant or employee of any Corporation or any other body owned or controlled by the Government shall, while visiting any country or territory outside India, accept, except with the prior permission of the Central Government, any foreign hospitality
2. Currently, the applications for grant of prior permission for accepting foreign hospitality have to be submitted in the form of hard copies along with the forwarding/recommendation letter of the concerned Ministry/Department, signed copy of the online FC-2 form and the invitation letter from the host or the host country. 
3. To streamline the procedure, it has been decided that applications in respect of Government servants and employees of Corporations or any other body owned or controlled by the Government, shall be accepted on the online system only. The online system is at
4. Therefore, along with filing the online application form (FC-2  Form), the following documents should be scanned and uploaded:
1. Invitation letter from the host organization or country. 
2.  Administrative clearance of the concerned Ministry or Department of the Government (clearly mentioning the date, venue and purpose of the visit along with nature of visit i.e. official or personal) 
3. The signed application Form (FC-2 form).  With the submission and uploading of these documents into the online system, an acknowledgement of the complete application.
5. Online submission of the applications for grant of prior permission for accepting foreign hospitality in respect of Government servants and employees of Corporations or any other body owned or controlled by the Government will be optional up to 30.09.2013. From 01.10.2013 onwards, applications in hard copies will not be accepted. 
6. Applications in respect of Members of Legislature or office bearers of political parties or Judges, may be submitted online as per procedure outlined in point number 3 above, or in hard copy. Both forms of submission will continue to be accepted for the time being.

7. Any suggestions and queries may kindly be sent by e-mail to ds-fcra® and for any problems in filing online application an email  may be sent to clsharmaanicin.

(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.) 



Peter Mckenyz

3 years ago

We all respect the Indian National Flag as it represents our Country, yet many cases come into the sight where it gets insulted intentionally as well as non intentionally. Recently another such case is got into the sight at Commonwealth Games.

Why is it naïve to expect Switzerland to co-operate on black money?
Switzerland is very clear on the secrecy of bank accounts and the best example of this is the Foreign Account Tax Compliant Act (FATCA) agreement signed by the US with Switzerland

For once it looked like that the black money problem of India had been solved, as far as Switzerland is concerned. Couple of days ago, media reports spoke about how the Swiss government had prepared a list of Indians suspected to have stashed black money in Swiss banks. There was also a mention of the details being shared with the Indian government. This news hogged the headlines till a denial came from the Government of India and also from Switzerland. Mr. Arun Jaitley said New Delhi had not received any official communication from Switzerland but was hopeful that cooperation between the two countries would bear results.
On the other hand, Mario Tuor, spokesman, Swiss Federal Department of Finance, while speaking to a leading daily in UK, expressed surprise at reports in the Indian media about Switzerland preparing a list of Indians suspected of having untaxed funds in Swiss banks, saying the last meeting between the two sides on the issue was held in New Delhi in February and that there had been no developments since then.
Now that the dust seems to have settled on the issue, the age old question has been revived, on the process of obtaining bank account information from Switzerland. For those who believe that a change of government at the center, or a tough stand by the government in New Delhi, will work wonders as far as getting black money information from Switzerland is concerned, are  being naïve. Switzerland is very clear on the secrecy of bank accounts and the best example of this is the Foreign Account Tax Compliant Act (FATCA) agreement signed by the US with Switzerland. It is important to note, that FATCA is intended to detect "US persons" who are evading US tax, using financial accounts held outside the United States. Under FATCA, non-US financial institutions would be required to report relevant information to the American tax authorities, specifically the Internal Revenue Service (IRS), about financial accounts held by identified Americans. This is something which India has sought as a country, but has failed to achieve.
Switzerland and FATCA:  While Switzerland has signed FATCA with USA, the details of accounts held by Americans in Swiss banks have to undergo various processes before it is reported to the Internal Revenue Service (IRS) of the USA. The steps of reporting accounts to USA are going to be as follows:
1. Banks in Switzerland will send a letter to the Americans holding accounts in Swiss banks, seeking their consent to report account details to the IRS. This means, without consent, no account will be reported to USA.
2. If account holders don’t give their consent to share account details with USA, the account will be considered non-consenting USA account. The bank will be legally obliged to report the quantity of the accounts and the total amount on all “Non-Consenting US Accounts” by the end of January, 2015, without mentioning the identity of the clients concerned.
3. Based upon this information and in accordance with the FATCA agreement, the IRS has the ability to submit a group request for administrative assistance regarding the “Non Consenting US Accounts” to the competent Swiss authority. This means that IRS is asking for account level details.
4. After a request from the IRS is received, the Federal Tax Administration (FTA) will publish the details of the group request in the Swiss Gazette, which will be anonymous. Account holders can check with their bank if their name is part of this group details notification. The account holder will have the right to counter the disclosure and the FTA will decide if the details need to be shared or not, which will again be published as a group request.
5. Even after FTA has finalised the details to be shared with USA, a bank customer will have the right to appeal to the Swiss Federal Administrative Court (FAC). The decision of FAC will be final in this regard.
The process prescribed under FATCA for sharing of information is very cumbersome and shows that Swiss authorities want to protect the privacy of bank account holders. While this kind of process has been set up with USA, it can only be expected that Swiss authorities won’t share relevant information with India easily, especially since there is no FATCA like agreement with India.
While FATCA is just one example, the most important point to note here is, that Swiss law entrenched bank secrecy in 1934, making it a criminal offense to reveal a client's identity. Switzerland over a period of time has become a major tax haven and had around $2.1 trillion in deposits, or 27%, of worldwide offshore wealth according to the Boston Consulting Group. In view of the approach followed by Switzerland and regulations prevailing in the country, it is indeed difficult for India to obtain details from USA. Lots of deliberation and persuasion may be required and the outcome may still be unpredictable. 
(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)


Look before You Leap
After more than three years, mutual funds are witnessing huge inflows from investors. Thereby proving, once again, that retail investors get in when the market begins to rally. But, as soon as the market goes down sharply, or moves sideways for a prolonged period, they lose patience and look for an exit. Our analysis of mutual fund flows data over the past 15 years has shown just that. Huge inflows have been reported at high market valuations. This poor sense of timing leads investors to low returns and, hence, they prefer to fixed-income investments that offer smoother returns in contrast. In our Cover Story, we analyse this behaviour of investors with past data with an exclusive survey to judge current investor sentiment. You will read about what drives this behaviour and where you should expect the market to be headed based on different economic parameters.
On the topic of investors’ trying to time the market, dynamic equity plans of mutual funds, which are supposed to free the investor from trying to time the market, have failed at their job. Our analysis has shown that majority of the schemes have even failed to outperform a systematic investment in an index over the past three years. We are not surprised. Turn to our Fund Pointer section for more.
As we have highlighted in the past, pension plans of insurance companies are a bad deal. What is the other safe and smart option available to savers to create a solid retirement corpus? In the Retirement section, our columnist and legal expert, Shirish Shanbhag suggests a far better and tax-efficient option— public provident fund. 
In her Different Strokes section, Sucheta writes on the stand taken by RBI governor Dr Raghuram Rajan against the key recommendations of the Financial Sector Legislative Reforms Commission. Over the years, Moneylife, as a pro-consumer entity, has noticed that it requires persistent efforts and loud media reports to secure action against the exploitation of financial consumers. Would Dr Rajan reassure financial consumers that they are soon going to have a system that is just and fair?


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