Thirty-five years ago, in September 1968, when the Research and Analysis Wing was founded with Rameshwar Nath Kao at its helm, then prime minister Indira Gandhi [ Images ] asked him to cultivate Israel’s Mossad. She believed relations between the two intelligence agencies was necessary to monitor developments that could threaten India [ Images ] and Israel.

The efficient spymaster he was, Kao established a clandestine relationship with Mossad. In the 1950s, New Delhi [Images ] had permitted Tel Aviv to establish a consulate in Mumbai [ Images ]. But full-fledged diplomatic relations with Israel were discouraged because India supported the Palestinian cause; having an Israeli embassy in New Delhi, various governments believed, would rupture its relations with the Arab world.

This was where the RAW-Mossad liaison came in. Among the threats the two external intelligence agencies identified were the military relationship between Pakistan and China and North Korea, especially after then Pakistan foreign minister Zulfiqar Ali Bhutto visited Pyongyang in 1971 to establish a military relationship with North Korea.

Again, Israel was worried by reports that Pakistani army officers were training Libyans and Iranians to handle Chinese and North Korean military equipment.

RAW-Mossad relations were a secret till Morarji Desai became prime minister in 1977. RAW officials had alerted him about the Zia-ul Haq regime’s plans to acquire nuclear capability. While French assistance to Pakistan for a plutonium reprocessing plant was well known, the uranium enrichment plant at Kahuta was a secret. After the French stopped helping Islamabad [ Images ] under pressure from the Carter administration, Pakistan was determined to keep the Kahuta plant a secret. Islamabad did not want Washington to prevent its commissioning.

RAW agents were shocked when Desai called Zia and told the Pakistani military dictator: ‘General, I know what you are up to in Kahuta. RAW has got me all the details.’ The prime minister’s indiscretion threatened to expose RAW sources.

The unfortunate revelation came about the same time that General Moshe Dayan, hero of the 1967 Arab-Israeli war, was secretly visiting Kathmandu for a meeting with Indian representatives. Islamabad believed Dayan’s visit was connected with a joint operation by Indian and Israeli intelligence agencies to end Pakistan’s nuclear programme.

Apprehensive about an Indo-Israeli air strike on Kahuta, surface-to-air missiles were mounted around the uranium enrichment plant. These fears grew after the Israeli bombardment of Iraq’s Osirak nuclear reactor in 1981.

Zia decided Islamabad needed to reassure Israel that it had nothing to fear from Pakistan’s nuclear plans. Intermediaries — Americans close to Israel — established the initial contacts between Islamabad and Tel Aviv. Israel was confidant the US would not allow Pakistan’s nuclear capability to threaten Israel. That is why Israeli experts do not mention the threat from Pakistan when they refer to the need for pre-emptive strikes against Iraq, Iran and Libya’s nuclear schemes.

By the early 1980s, the US had discovered Pakistan’s Kahuta project. By then northwest Pakistan was the staging ground for mujahideen attacks against Soviet troops in Afghanistan and Zia no longer feared US objections to his nuclear agenda. But Pakistani concerns over Israel persisted, hence Zia decided to establish a clandestine relationship between Inter-Services Intelligence and Mossad via officers of the two services posted at their embassies in Washington, DC.

The ISI knew Mossad would be interested in information about the Libyan, Syrian, Jordanian and Saudi Arabian military. Pakistani army officers were often posted on deputation in the Arab world — in these very countries — and had access to valuable information, which the ISI offered Mossad.

When young Israeli tourists began visiting the Kashmir [ Images ] valley in the early nineties Pakistan suspected they were Israeli army officers in disguise to help Indian security forces with counter-terrorism operations. The ISI propaganda inspired a series of terrorist attacks on the unsuspecting Israeli tourists. One was slain, another kidnapped.

The Kashmiri Muslim Diaspora in the US feared the attacks would alienate the influential Jewish community who, they felt, could lobby the US government and turn it against Kashmiri organisations clamouring for independence. Soon after, presumably caving into pressure, the terrorists released the kidnapped Israeli. During negotiations for his release, Israeli government officials, including senior intelligence operatives, arrived in Delhi.

The ensuing interaction with Indian officials led to India establishing embassy-level relations with Israel in 1992. The decision was taken by a Congress prime minister — P V Narasimha Rao — whose government also began pressing the American Jewish lobby for support in getting the US to declare Pakistan a sponsor of terrorism. The lobbying bore some results.

The US State Department put Pakistan on a ‘watch-list’ for six months in 1993. The Clinton administration ‘persuaded’ then Pakistan prime minister Nawaz Sharif [ Images ] to dismiss Lieutenant General Javed Nasir, then director general of the ISI. The Americans were livid that the ISI refused to play ball with the CIA who wanted to buy unused Stinger missiles from the Afghan mujahideen, then in power in Kabul.

After she returned to power towards the end of 1993, Benazir Bhutto [ Images ] intensified the ISI’s liaison with Mossad. She too began to cultivate the American Jewish lobby. Benazir is said to have a secret meeting in New York with a senior Israeli emissary, who flew to the US during her visit to Washington, DC in 1995 for talks with Clinton.

From his days as Bhutto’s director general of military operations, Pervez Musharraf [ Images ] has been a keen advocate of Pakistan establishing diplomatic relations with the state of Israel.

The new defence relationship between India and Israel — where the Jewish State has become the second-biggest seller of weapons to India, after Russia [ Images ] — bother Musharraf no end. Like another military dictator before him, the Pakistan president is also wary that the fear of terrorists gaining control over Islamabad’s nuclear arsenal could lead to an Israel-led pre-emptive strike against his country.

Musharraf is the first Pakistani leader to speak publicly about diplomatic relations with Israel. His pragmatic corps commanders share his view that India’s defence relationship with Israel need to be countered and are unlikely to oppose such a move. But the generals are wary of the backlash from the streets. Recognising Israel and establishing an Israeli embassy in Islamabad would be unacceptable to the increasingly powerful mullahs who see the United States, Israel and India as enemies of Pakistan and Islam.

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TAX HAVENS – INDIA’S STOLEN WEALTH…

Some 70 odd small territories in different locations of the world endeavor to attract investment from outside their border offering financial secrecy laws. These are commonly known as “tax havens”, because they also impose little or no tax on income from sources outside. So tax havens are ideal lodges for black money of many countries.

Switzerland is a major tax haven with more than a third of global private funds deposited in its banks. The tax havens have grown phenomenally in the last couple of decades. The current severe economic crisis in the West, which has caused the collapse of several giant financial institutions, has forced many western countries to turn their eyes on the secret wealth. Consequently, secret banking and tax havens became the target of Germany and France, and later the UK and USA. These nations have begun a crusade against tax havens and, especially, against Switzerland since the middle of last year.

This new development opens up a great opportunity for India, which has been a victim of flight of capital to tax havens and secret banks. But is India doing now what it should be doing to protect its national interest? If not, what should India be doing to avail of the new opportunity that seems to be opening up?

India should join hands with different world bodies, including G-20, to address the issue of safe tax havens across the globe. If a deal comes through between the G-20 and different tax havens, particularly Switzerland, the efforts to recover Indian monies illegally stashed away abroad can be hugely successful.

These illegal funds, if brought back to India, can tremendously boost our foreign exchange reserves and facilitate infrastructure investment. It is pertinent to mention here that the revenue generation efforts of countries like India are subverted by these deposits and that the gap between tax evasion and terror financing is getting narrower. There are also concerns regarding the financing of terror groups by some of the tainted money from these tax havens.

Also, lesser the transparency in bank accounts, greater the threat to civilized society.

Barack Obama is concerned about them and so is Angela Merkel, the Chancellor of Germany furious about them and Sarkozy of France wants to regulate them. But the leaders of one of the most affected countries – India – are not saying or doing anything about them.

At least let Us know what is going on in these foreign jurisdictions that offer financial secrecy laws in an effort to attract investment from outside their borders.

It is difficult to quantify the amount of assets being held offshore or the rate at which the industry is growing. But it is estimated that some USD 5 trillion in assets is held “offshore” in tax havens. One authority estimates that the annual revenue loss to the USA at a minimum of USD 70 billion.

Tax haven service providers and their clients know their actions are veiled from tax authorities by banking and commercial secrecy laws and by lack of tax treaties or tax information exchange agreements. They create paper entities to disguise the real parties to the transactions, and many are willing to create false documents to disguise the real nature of transactions.

At least forty countries aggressively market themselves as tax havens. Some have gone so far as to offer asylum or immunity to criminals who invest sufficient funds. They permit the formation of companies without any proof of identity perhaps even by remote computer connections.

Generally though such extremes are found in emerging nations where the stability and security of the financial, legal, political systems is questionable.

The largest concentrations of assets are attracted to the stable secure environments of the established tax havens – those that have existed for a number of years and enjoy the diplomatic protection of former colonial powers.

These tax havens are estimated at more than 70 in numbers, but as the IRS (Internal Revenue Service) of USA discussion reveals, around 40 of them aggressively market themselves. The popular ones are Switzerland, Luxemburg, Liechtenstein, Channel Islands and Bahamas.

The “Liechtenstein Affair”

Recently, one of the tax havens –Liechtenstein – was in the news. Liechtenstein is a country as well as a convenient “letter box” for moneyed people all over the world to hide their ill gotten wealth. It is a small principality where, if you jog a little longer, you may end up in the neighbouring country! The crown prince, with a difficult-to pronounce name – Alois von und Zu Liechtenstein (note that the Prince’s surname is same as that of the country) – is angry with Germany for launching a massive tax-evasion investigation involving funds hidden away in his country’s vaults. Germany’s intelligence agency seems to have paid an unnamed informer more than USD 6 million for confidential and secret data about clients of LTG group, a bank owned by the prince’s family.

The revelations have already led to the resignation of the head of Deutsche Post – the former German mail service that is currently the world’s largest logistics company. The Liechtenstein leaders are furious and have focused their ire at data theft rather than on the facts of the case.

The German government has announced that it would share information on accounts held in the tax haven with any government that wanted it. The spokesman for the German Finance Ministry, Thorstein Albig, has indicated that they would respond to such requests without charging any fees for the information. Finland, Sweden and Norway have expressed interest in the data obtained by the German intelligence.

Though our tax evaders and crooks are omnipresent, in all continents and in all tax havens, the Indian Government’s response has been lukewarm on this issue. It should have dispatched immediately senior officials to get the names of tax offenders from Germany. It is common knowledge that illegal money of India amounting to trillions of dollars is parked in various tax heavens like Antigua, Switzerland, Bahamas, Liechtenstein, Isle of Man and St. Kitts etc.

Throughout the Nehruvian socialistic period, under invoicing of exports and over-invoicing of imports was very common and the funds were siphoned off to these tax havens. In a socialistic way, all leaders – be they from business, politics, films, sports or bureaucracy – participated in creating what we may call ‘Secular Ill-gotten Wealth’ that cut across any caste or creed distinctions.

The only things new are those that have been forgotten.

All this keeps getting stirred up from time to time but without much avail it subsides leaving only fragments of imprints upon the consciousness of the masses. For the most part we can at least equip ourselves with the knowledge of where and how much wealth resides in a world full of poverty and increasing crunch of necessary resources…

Article by the Admin.

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Participatory Notes, FII’s and the Stock Exchange…IS INDIA Developing?

In the previous article which by the way is an introductory compilation of factual information authentic in origin and research, we were all made aware of the hidden wealth of India, which even today amidst a pre-2007 recession era registered the second highest growth rate of any country in the world behind our bigger brother, China.

It only creates guilt to apprehend with common sense that half of our population which still does reside in the domain of rural establishments scattered across the terrains, depending on the agrarian system of an economy as its backbone, exist with dire poverty of less than Rs.100 a day for a family of 2-3 and are confined to the lack of potable, drinking water and electricity, keeping the faith going on the ever presumptuous monsoons for a living.

Yes, I am saying that the GDP (Gross Domestic Product) registered in the W.T.O statistics database of the last 4-5 years is just an embellishment of our urban growth with its varied class of citizens living in the ‘comfort zone’ of high rises and polluted streets. Whoever still thinks we are to become a developed nation is still living in the stratosphere and what with the other half dying slowly but surely and steadily.

Enter the tax havens once again with the tons of hoarded wealth, so much so it would cause logistical problems to the Government to even just transfer it back to its rightful place!

In the domestic capital market, substantial inflow of money comes from these tax havens by shell companies or by entities that do not want to be registered. India knows that these tax havens distort global resource allocation as well as domestic initiatives in enhancing government coffers. They encourage venality and are also possible sources of substantial drug and terror money. For instance, Securities and Exchange Board of India took stringent action in 2007 to phase out Participatory Notes (PNs), not registered by FIIs, and from the Indian share markets since most of these exotic instruments were issued to/by anonymous entities not regulated by SEBI. The Board pointed out that nearly 50 per cent of the funds flowing in were through entities not registered under it.

The PNs had become the most preferred instrument of investment, with the largest investments from abroad in the Indian stock market routed through them. The amount invested through PNs in Indian stock market increased by several times after the UPA government assumed office. The notional value of investment in PNs, which aggregated Rs 31,875 crore in over 10 years up to March 2004, burgeoned to Rs 3,53,484 crore by August 2007, i.e. increased by over 11 times in just 40 months! Investments through PNs constituted 20 per cent of all FII investments in 2004. This increased to over 51.6 per cent in August 2007. This data is available on the SEBI website. Thus, in 2007, more than half the FII investments were through anonymous PNs. The sub-accounts created by the FIIs for these nameless entities are fraught with dangerous consequences and security risk. The sources of these funds are unknown; the investors are nameless; and billions of dollars invested through PNs are address-less. “Know Your Customer” norms, which the law makes it mandatory for opening simple banks accounts by Indians in this country, are not followed while allowing investment of billions of dollars in the Indian stocks market. The PN mechanism through which unnamed investors participate in our markets, invest and disinvest stocks worth billions of dollars and make and repatriate profits – is thus a mystery wrapped in a puzzle, packed in an enigma, crammed inside a conundrum and delivered through a riddle. The clamour for this form of investments is intriguing, if not outright suspicious. Many experts felt that PNs were Weapons of Mass Destruction – WMD – of our stock markets. Actually, SEBI had proposed that FII and their sub-accounts not be allowed to issue or renew offshore derivative instruments. It also wanted them to wind up their current positions over the next 18 months, but these restrictions were revoked under pressure from the Central government. It was generally believed that PNs are not to be issued to Indians, namely Indian residents/NRIs/PIOs/OCBs etc, essentially to deny Indian entities investing in our share market by using anonymous PN routes under Foreign Institutional Investors scheme. But something else was perhaps happening. Indian entities were perhaps funneling funds from tax havens back to India through the FII route.

Unfortunately, the government does not reveal the nature and identification of Foreign Institutional Investors investing in the market nor the nature of origin of these entities. The Indian attitude to this serious issue is in contrast to that of the US. The UBS (Union Bank of Switzerland) recently paid a penalty of over $800 millions in the US and also disclosed the secret account details of 300 Americans as per the US government wish. But in India, the same UBS paid a paltry penalty of a few lakh rupees to the SEBI for not – yes, not – disclosing the names of secret PN holders whose funds it had invested, and settled the case in fast track mode!

Outflow of Funds from India: On the other hand, we find are more disturbing issues pertaining to outflow of funds from India. Statistics available on Union Finance Ministry website on the country-wise approvals for Direct Investments in JVs (Joint Ventures) and wholly-owned subsidiaries during 1996- 2007 reveal that more than one- third of outflows out of a total of around 31,000 million USD is to many well known tax havens like Channel Island (5,400 million USD), Mauritius (2,600 million USD), Virgin Islands (1,008 million USD), Cyprus (1,361 million USD) and Cayman Islands (104 million USD). Data is neither available for FIIs, nor for terms of who are the corresponding investors.

Why are we very frugal / discreet in providing data when it comes to our foreign inflows and outflows? Unfortunately, our parliamentarians rather than being nosey are increasingly being noisy in putting out probing questions on what is happening in our own markets. The issue is of paramount importance due to many reasons. Any expert on Indian stock markets knows that our markets are increasingly being moved by global flows – both inflows and outflows of funds. Secondly, such flows may be of ill-gotten wealth of Indians kept abroad in tax havens or domestic funds sent out and brought back to facilitate some activities.

This has to be seen in context of concerns expressed by our own National Security Advisor M K Narayanan regarding the possibility of terror funds coming through financial markets. When parliamentary elections were around the corner, the issue became most important since we all know that huge funds – not always accounted for – were used during the electoral process.

INFERENCES:

The stock market has been swinging from 8,000 to 20,000 sensex points on the B.S.E in the span of the last 3 years. It really has not one bit to do with the true growth and development of our nation which as always must be homogeneous and widespread, ensuring prosperity and wealth maximization to one and all, both urban and rural, rich and poor, haves and the have not’s.

News flash is that the stock exchange spiked up when the UPA Government was voted back to power collectively, democratically and it just re-assured the slumbering masses of their comfort zones of always being led as a herd and that they did the right thing! A country’s prosperity is not calculated from a stock exchange activity tabulating the average performance of its top 30 stocks in points, day in and out. That is just a gambling casino of formal sorts to keep the rich…richer(who don’t know what to do with all the money, except make it more…) and the poor, continue to gape at the television screen, amazed by all the colourful numbers floating around in lines.

Everything is manipulated to suit the needs of the ruling elite and continues to go unnoticed by – we the people who just don’t want to do a thing about it. A country becomes proper only when its people take control of their freedom and sovereignty by voicing these issues repeatedly until met with success and raise consistent concerns over such corrupt and degenerative practices of decades.

We can start off by first learning of how the system has been working before we decide to change it…

Article by the Admin.

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LIVING IN THE SHADOWS OF THE MONARCHS

Global Financial Integrity (GFI), a global watchdog headed by Raymond Baker, a Harvard MBA and Brookings scholar to curtail illicit money flows, has recently brought out detailed estimates of the black wealth hoarded in secret havens from different countries. GFI research shows that during the period 2002 to 2006, annually $27.3 billion was stashed away from India, making a total of $137.5 billion for the five-year period. That is, in just five years, Indian wealth amounting to Rs 6.88 lakh crore has been smuggled out of India. This gives a clue as to how much Indian money would have slipped out of India in the last 62 years, particularly during the Nehruvian socialist regime when the income tax (97.5 per cent) and wealth tax (almost equal to the income earned on investments) together constituted double the income earned. It is undisputed that the Nehruvian socialist model forced huge sums out of India. So the amount of Indian black wealth secreted away in the last 60 years — estimated at from $500 billion (Rs 25 lakh crore) to $1400 billion (Rs 70 lakh crore) — does not seem to be wide off the mark. Economists call it flight of capital. This is the people’s money stolen from them.

We are all acquainted with the establishment of the Stock Exchanges and how their very existence is the purpose of increasing the gap between the rich and the poor or the haves and the have nots. They definitely do not serve as the index for economic growth or prosperity or the essential standard of living of ‘we the people’ . Rigged to the core equivocally as much as any of the other corrupt degenerative systems of our societies or governing authorities all tied up in an inscrutable knot of lies, misconceptions, deliberate deceit and mass ignorance of the respective functions. It suffices to say the Foreign Direct Investors/Investments and the Foreign Institutional Investors and Investments play about 1/3 of the part of the Stock Exchanges in speculation, stock bubbles and manipulation of trading indices. Quite a bit of this one-third comes in the form of Tax Haven hoarded illegal wealth which goes unchecked and unnoticed.

It took one M.N C about 250 years ago to conquer India under the Imperialism of the Commonwealths being the Crown Jewel in an Empire so vast the Sun never set on it. Now we have 176 of them and more entering everyday to do the job and make sure we continue to stay under dominance, servitude, punishment and enslavement of neo modern feudalistic remnant based capitalistic free world/democratic  globalization.

A Global Village is what the world has become these days and yet in our own hut we let our Caucasian based masters run amuck with the contempt and belligerence of colour based superiority and a pat on the back to suffice our cowardice and timidity with the heaping of titles such as “intelligent and skilled labour forces”  and “the perfect back office operations hub in the world”, oh and yes the needed boost to the IT industry and no pun intended, I wasn’t even referring to the Income Tax departments!

We as a nation stand for more than just spirituality and yoga. We can be what China is now without having to resort to any form of communalism. Just need to have the infrastructure and the implementational willingness. We can even get there faster without the extra babies!

So there we have 45 years of Nehruvian socialistic rigidity further impoverishing a nation so renowned for its former glory and fortitude of natural assets. Now the sheets have been changed but the mattress still remains wet. We have his continued lineage of usurpers to follow his agendas through the present termed governments of so deemed opposite sides of the same coin furthering subtle dominance by the banking cartels and the entertainment industry cartel, all the while ignoring half a billion under the U.N stated poverty line clinging to drops of hope and survival as unpredictable as the monsoons themselves. When L.K. Advani sent across what looked like a googly at the Congress on the issue of Indian black money in Swiss banks on March 29—just three days before the prime minister was to attend the G-20 meeting in London on April 2—he would only have intended to put the party on the back-foot on an issue on which the Congress looked vulnerable. How his calculation has more than paid off and how the BJP has now on hand a powerful issue that may fix the Congress is the story ahead.

Advani did offer enough evidence on that day to demonstrate that the UPA government had shown perceivable disinclination to get at the Indian moneys abroad. Yet, he boldly counselled the prime minister, who was attending the G-20 meeting, to press the issue vigorously at the meeting, failing which, he warned, the BJP would make it an election issue. Imagine that the prime minister had rung up Advani that evening, told him that was precisely what he was intending to do at the G-20 meet and thanked Advani for drumming up public support for that! He would have hit the Advani googly out of the electoral arena. But Advani obviously knew that nothing of that sort would happen. The reason: the ruling dynasty. This issue, as everyone in the party knew, touched the First Family and its friends. The family’s alleged involvement with Bofors kickbacks and Ottavio Quattrocchi and the way the UPA dispensation allowed ‘Q’ to get off the hook and also to snatch back the Bofors kickbacks held in frozen accounts point to more than just suspicion. Result? The Congress went so far back in defense that it crashed on its own stumps.

Pranab Mukherjee and Kapil Sibal then stepped in and countercharged that the NDA government had messed it all up by replacing the Foreign Exchange Regulation Act (FERA) with the Foreign Exchange Management Act (FEMA), which, they alleged, had increased the flow of illicit money from India.

The BJP shocked them by reading out an article authored by P. Chidambaram in The Indian Express (in 2002), in which he welcomed the replacement of FERA with FEMA. The BJP also cited the media report which said that instead of pressing the Germans for the names of Indians in LGT Bank’s secret accounts list, the UPA government was advising the Indian ambassador in Berlin not to take the initiative and pester the Germans for details!

Somewhere in between, the prime minister counselled the people of India to read an article by a former advisor to the government in a Kolkata daily as a counter to the BJP challenge! There was more fun. Despite his family’s enviable record in stifling the Bofors—read the Quattrocchi—case, Rahul Gandhi promised full investigation into Indian monies stashed abroad. When the Congress theatre was looking so disparate, desperate and comical, the other parties—the CPI(M), the AIADMK, the Samajwadi Party and the BSP—seemed more serious about the issue. They vowed in their manifestos, like the BJP did, to bring back Indian monies abroad, leaving the Congress in splendid isolation.

But the BJP seemed to have done perfect homework before raising the issue. As must have been planned earlier, Advani appointed a task force consisting of four persons—Ajit Doval, a security expert; R. Vaidyanathan, an academic with specialisation in finance; Mahesh Jethmalani, a lawyer; and a chartered accountant with investigative experience, S Gurumurthy —to prepare the roadmap to recover the loot and advise the BJP. Advani released the task force’s report in Mumbai on April 16. The constitution of the task force itself was a strategic move. On the dispute over how big is the loot, the task force silenced the skeptics thus: “…the math of the loot may be disputed but the fact of the loot cannot be.” Yet, the report was no partisan political document. It captured how the global situation has taken a U-turn after the economic crisis; how the West, which was celebrating financial secrecy as a sacred part of individual privacy, has started seeing it as evil; how western nations themselves now feel threatened by secret banking and tax havens; how they are determined to dismantle both; how no government in India, of any party, could have done much in the past; how the time is ideal for India now to join the global effort to track illicit monies; how India has been missing its opportunities and has given the impression that it was not keen on getting at Indian wealth stashed abroad; what India as a nation should do, and so on.

The report also unveiled the global as well as the national strategy for India— not for the BJP as such.

Article by the Admin.

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