Ajit Doval on how to get back money stashed abroad
Moneylife Digital Team 01 December 2014

Ajit Doval, currently national security advisor and one of the most important persons in Modi administration, had openly shared his ideas, a few years ago, on how to get black money back that is stashed abroad


Ajit Doval, the National Security Advisor (NSA) of India, is not a run-of-the-mill officer. An ardent nationalist, he comes packed with abilities to conceptualise strategies and plans that may realise Prime Minister Narendra Modi’s dreams and national goals. Doval is former Director of the Intelligence Bureau (IB) of India. He is a recipient of the Kirti Chakra, one of the highest military gallantry awards, the President's Police Medal for distinguished service, and the Indian Police Medal for meritorious service.


Doval, in a blogpost on 21 February 2011 talked about how India can get the money plundered abroad. Here is a summary of his thoughts, which are significant given the powerful position he commands in the current administration.


"The basic problems that India faces are two-fold. Firstly, a continuing rise in the share of black money that has acquired alarming proportions and secondly a substantial portion of it getting stashed in tax havens abroad. What compounds the problem is the fact that the state is seen as lacking both the capacity and the intention to reform the system or deter the wrong doers. A nexus between the black money and those exercising power is suspected by the people, weakening the national will and raising the level of public cynicism. Contrary to expectations, liberalisation and economic growth, rather than abating, has multiplied the phenomenon manifold. Ironically, during the last five years, when the country witnessed a high economic growth, had an economist Prime Minister donning the mantle of ‘Mr Clean’ and global environment was relatively conducive to track the dirty money, growth of black money and its illegal movement abroad has been the highest. The Global Financial Integrity (GFI) has estimated that more than two-third of the Indian money stashed abroad has been generated in post liberalisation period after mid-nineties. The Supreme Court of India observed it to be not just tax evasion but “Theft” and “Plunder” of Indian money," Doval wrote in 2011.


According to the 'super-spy', to get back the money stashed abroad is a painstaking and time-consuming task. He says, "The nation will have to design a well thought out multi-pronged strategy ranging from enacting appropriate laws, empowering its investigative and intelligence agencies, using political and diplomatic pressures and leveraging its new economic clout to achieve its goals. Most importantly, a political consensus and national will have to be created to achieve this national objective."


Here are the measures suggested by Doval at that time to bring back the 'black money':


a) Taking cognizance of reports of the IMF and GFI the Government of India should enact a law emphasizing that huge Indian capital has been illegally stashed away and needs to be ploughed back. It should be a penal law so that all the defaulters could be treated as criminals. On the strength of this law the government should declare itself as the sole owner and beneficiary of all Indian monies, assets and bank accounts held abroad by or the dependants of Indian nationals without due declarations to the Indian authorities. The law may provide that where the Indian national are able to prove that the assets held by them have been acquired through proper means and the non-declaration was merely a technical default, the government should restore the assets back to the claimant. It, however, should shift the onus of proof on the person who holds undeclared wealth abroad. On the strength of the said law, the Government of India can ask the world governments and the foreign banks, like the Swiss Banks, to recognize Indian government as the beneficiary of the undeclared wealth and freeze the accounts till owners of the wealth are able to prove that they had acquired it by fair means and from legally valid sources.


b) On the basis of various expert reports and other credible information available, there are reasonable grounds to infer that a substantial portion of Indian illegal money stashed in foreign banks owes its origin to criminal activities like corruption, misappropriation of government funds, fraud, cheating, activities of organized criminal gangs, drug mafias, terrorist financing, ransoms etc. All these are cognizable offences punishable under criminal laws of India including the Indian Penal Code, Prevention of Corruption Act, The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, Foreign Exchange Management Act, The Narcotic Drugs and Psychotropic Substances Act, Money Laundering Act, The Smugglers and Foreign Exchange Manipulators Forfeiture of Property Act etc.


Government of India should suo moto register an omnibus criminal case against suspected unidentified persons who have been indulging in criminal activities and unauthorisedly transferring the money to tax havens abroad. The case may be transferred to a special team of the CBI and investigated under supervision of the Supreme Court. They must register the FIR under various sections of the IPC, money laundering and anti-terror laws etc. Registration of the criminal case will enable the investigating agencies to summon people for questioning, interrogate suspected persons, seize incriminating documents, conduct raids, make arrests, examine documents etc.


This would also enable the Government to get assistance of foreign police and investigating agencies for gathering requisite evidence and information. Most importantly, this will empower the government to approach different banks abroad, as also the concerned governments, for information regarding the money trail as they pertain to criminal cases.


c) Lots of monies of Indians in secret bank accounts have been appropriated by the banks, as the account holders cannot by legal and open documentation bequeath them to their progenies and most of them die without informing their progeny about the account. This may run into billions from the 1950s. Such monies should be declared by a special law as and vested in government of India with a provision that the progenies of the account holder may claim the same by providing requisite evidence to show that the monies in such accounts were sourced in legal business.


d) Indian political system needs to recognise that India is already a leading economy and an emerging geo-political power. In the shifting economic centres of gravity in the new world order, countries, particularly the tiny tots like Switzerland, will have enormous stakes in our country. The present and potential power of India should be leveraged, like US and Germany did to reclaim the black monies of its nationals stashed abroad. Switzerland has billions of dollars of investments in India that they would not like to jeopardise by ignoring our laws or undermining our bonafide national interests. If our geo-political power was properly exercised, the Swiss government could never have behaved the way it did in Hasan Ali case.


e) Every electoral candidate should file an affidavit before elections that he does not hold illegal money abroad. The same should be applied to senior appointees like Governor of Reserve Bank of India (RBI), SEBI Chairman, CBI Director, Cabinet Secretary, IB Director, RAW Chief and CVC. By an act of Parliament, persons who have accumulated funds abroad should be barred from holding any public office and getting loans from banks as a form of punishment.


f) India must join global efforts against tax havens and secret banking. Recently, there was a Task force meeting of the Financial Integrity & Economic Development— in Bergen Norway on 28-29 September 2010. Our Finance ministry representatives also attended the conclave but remained a passive participant. The Task Force, a consortium of more than 60 governments, NGOs and foundations, is focused on the need for greater transparency in the global financial system for the benefit of both developing countries and industrialised nations. Governments participating in the Task Force include Norway, Germany, Denmark, the Netherlands, France, Spain, Chile, Canada and the Paris-based Secretariat of the 59 government members of the Leading Group on Innovative Financing for Development. Global Financial Integrity leads the Task Force. We are currently full member of the Financial Action Task Force (FATF) that gives us more elbowroom from being an observer than in the past. The FATF provides opening to us for taking up national interest financial issues at global fora as also the type of actions we could initiate at the domestic front. India should play a lead role in all these initiative.


Doval wrote, "We are living in extra ordinary times – with possibilities ahead both of great opportunities and historic blunders. As a nation, we owe it to the deprived and ordinary people of India and future citizens of India the sacred duty of unearthing these vast national resources, which has the potential to transform the country into a developed nation much sooner than we can otherwise. India is not only a country, but, also a great civilization, which has from time immemorial propagated non conflicting ideas and practiced non-conflicting methods."


"As a rising nation, we need to set proper standards for ourselves so that we become the alternative model for the world of conflict in search of peace and harmony. Being viewed as a corrupt and dishonest nation and being seen as a nation of buccaneers who bolt away with billions of dollars when a vast population of our country is living in abject poverty will hardly give us the moral and ethical authority to be of example to the world. The time is propitious and we need to act displaying highest degree of national will to get our looted money back," the NSA wrote in 2011.


It would be interesting to see how Doval and the Modi government implements these ideas to bring the money plundered and stashed abroad.

Dayananda Kamath k
10 years ago
even the 80-20 scheme introduced for gold imports just before election and easing the norms just before the new govt comes to power also may be part of money laundering exercise as well as to give credibility to previous govt action of containing trade deficit. because it is practically impossible to adhere to these norms and effectively monitor it. further allowing/ no restriction on nri bringing gold scheme, without any mechanism to check the final destination of the gold ( they may be just carriers for a commission) govt?rbi has allowed an easy mechanism to bring the havala money.
Dayananda Kamath k
10 years ago
concept of black money should be first taught to rbi the moneytory authority and custodian of foreign exchange. they are not bothered about monitoring export advance received. facilitating hiding black money by increasing the limits of prepaid cards regularly. even not bothered to take action in case of violations even when reported to them.
Simple Indian
10 years ago
It all boils down to the age old saying - where there is a will there is a way. Since India always lacked the political will to progress, the political class is the biggest contributor and beneficiary of black money in India. Though some of it is invested in benami property deals in the highly opaque and unregulated real estate sector, much of it is stashed safely in tax havens abroad. The govt needs to curb black money generation, and also pursue claims on black money of Indians abroad.
Yerram Raju Behara
10 years ago
But what about arresting further accretion of black money? There is still a lot to be done. Business in waste handling, scrap dealers etc., do not transact through banks billions of trade. Several privately practicing doctors - particularly specialists attached even to corporate hospitals do not disclose their consulting fees. Even the income tax officials are scared to book them, for who knows, one day, they may need them! Most film actors charging lakhs and crores of rupees that usually figure in the media do not disclose their real earnings. These are havens of black money that can immediately be arrested.
Rangarao Ds
10 years ago
Well, why delay, Mr. Prime Minister? A Chanakya-like man is at your disposal and he has offered you the best possible and more practicable solutions to bring back the black money from abroad. Now, it's up to you to take it or leave it and you know the consequences of both. Efforts to get back the slush money must not only be made but also seem to be made. Also, efforts to prevent generation and flight of black money must also be made once for all without any loop holes to be exploited.
Suketu Shah
Replied to Rangarao Ds comment 10 years ago
Right now there are more imp things than black money like getting the economy(stagting under Chidambaram last 4 yrs) moving big time.You wl see hugh black money inflows automaticllty once the economy gets going.Expect India's best budget ever 28 Feb.
Ralph Rau
10 years ago
The BJP with the help of the RSS will no doubt promote high moral standards and integrity, probity and virtuous living.

Hindutva means a corruption free Ram Rajya is on the way.
Replied to Ralph Rau comment 10 years ago
dreamers are there to stay. Corruption free Ram Rajya will exist in Purana pages not in practice. We are already know black money is converted to gold and coming back to India. It is easy to hide and can be converted white or black depending on the circumstances. The worst part of this is the money can go to fund terror and drug mafia. Wait and see.
B. Yerram Raju
Replied to vishal comment 10 years ago
While the efforts to bring black money can go on at their own pace, it is more important to plug the loopholes in the existing environment in the country. Most real estate transactions, as mentioned earlier, payments and settlements of film actors' remunerations, earnings on films, transactions in waste and scrap, doctors and lawyers, and tax practitioners should all be put on the scanner without delay if the Government is really serious in arresting the window of opportunities to generate the black money. It is a proven fact that merely introducing a tax would not turn the events for good.
Tarlok Mandair
10 years ago
The law should be that disproportionate assets should be confiscated unless within a year they can be proved there legal source. The prove must come the holder of these funds. So far nothing has bin done as the guilty still got their funds and the cases take too long and the media does not follow the cases with the same vigor after bringing them to front pages. All hopes are on Modi and I hope and pray on his success. Tarlok.
10 years ago
I am pleased to see that Doval has referred to corruption as crime. It remains to be seen as to what is actually done by the Government he now advises.
10 years ago
Firstly, we all know whose money Hasan ali was handling. Progress in case was impeded by those in power.

Secondly, need to attach / confiscate at the time of filing FIR, else all assets get transferred.

Lastly, need to get a legislation to have a copy of the Last WILL of all politicians retained with SC. This should be co-related with declarations made with politicians while standing for elections.
10 years ago
Sir, no need to raise the Hasan ali case. We all know whose funds he was handling and how those in power assisted by time delay tactics,=.

Other aspect is that till we get confiscation / attachment clause immediately on FIR filing, the guilty will get away.

Other aspect that needs to be tackled is knowledge of WILL of the deceased. The details of all politicians should be held with the SC. Reason is that declaration made by politicians need to be co-related with actual tranfers on demaise.
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