High-level graft fortifies parallel economy

India fulfilled its commitment to corruption by ratifying the United Nations Convention on corruption in May 2011, joining 140 countries who have signed the Agreement.

Although India had accepted the Convention in 2005, it took six years for the Government to take this important step.

The question now being asked is whether the country would amend its Municipal Laws and administrative and legislative to eliminate corruption.

When ordinary Indians were campaigning for effective laws in India such as the Lokpal Bill, the Government cited the tough legislative procedures already in force but promised to establish committees to draft such legislature.

The UN Convention would enable India to promote transparency and accountability in its public services. Every Convention is a supplement to transnational organised crime, aimed at strengthening municipal, national and international laws to promote transparency and accountability.

The main challenge

There is more to ‘direct action’ than mere ratification of a Convention. India faces the mammoth problem of unearthing unaccounted money, tax evasion and ill-gotten and laundered money kept in banks operating in tax havens.

Article Four of the UN convention empowers Member States to carry out their objectives in their respective jurisdictions, in a manner consistent with the principles of sovereignty. If read correctly, the Convention does not permit one State to interfere with the laws or breach the territorial sovereignty of other nations.

It requires mutual cooperation among the Member States to enact anti-corruption laws to retrieve illegal money deposited overseas.

In the Indian context, if the Federal Government thinks seriously to stop the flow of illegal money overseas and tap the monies deposited in foreign banks, then it needs to make laws and formulate policies that would enable it to establish bilateral treaties with other countries in its campaign against corruption.

India should also consider enacting effective Municipal Laws with adequate safeguards against money laundering.

Private sector organisations, high net worth individuals and even small entrepreneurs use hidden monies to fund political parties, especially during general elections. The Government must make it mandatory for all such contributions be placed in the public domain through its Right to Information Act.

Law enforcement agencies such as the Central Vigilance Commission, Central Bureau of Investigation and the Central Information Commission should be reoriented to suit the changing needs of the country.

Unaccounted money, stated to be worth at least $US 1.5 trillion, is virtually a parallel economy in India, controlled and operated by tax evaders, smugglers, dons of the underworld and terrorists. The Supreme Court of India has continuously directed the Federal Government to control and contain this menace but no more thanlip service has been done over the years.

Voluntary Disclosure Schemes with assured amnesty, as done in the past in the case of tax evaders in India, could be of help.

The recently enacted ‘Finance Act’ is vague and does not reach far enough to nab offenders and seize or free assets their overseas assets with the help of respective governments. The Federal Government has neither shown initiative nor interest in tackling this problem.

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