cbi complaint acaci

8/3/2019 Cbi Complaint Acaci

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Action Committee Against Corruption in

India (ACACI)(Championing Action Against Corruption)

A-77, Nizamuddin East, New Delhi 110013,

Phone: (011) 2435 7388

India

www.acaci.in

hairperson

. Subramanian Swamy

embers

ri A. Surya Prakash

ri A K Doval (IPS) Retd.

ri J. Gopikrishnan

ri K N Govindacharya

ri K Sampath Iyengar

ri Prof. M D Nalapat

ri M R Venkatesh

ri Prof. R. Vaidyanathan

ri. Dr. S. Kalyanaraman

ri. S. Gurumurthy

ri Saryu Roy

ri V. Sundaram(IAS)Retd.

ember Secretary:

ri. Abhishek Joshi

Dear Shri AP Singh,

As you are aware, people all over the country are exercised over the issue

corruption and black money and the stashing away of illicit funds in tax haven

across the world. There is also growing frustration among the people about th

States inability to curb these trends and to criminally prosecute the offenders.

The Action Committee Against Corruption in India (ACACI) strongly feels that fir

and deterrent action is needed to tackle this menace. It is our considered view th

as a first step an FIR should be registered immediately against unknown personwho have generated illicit funds and parked them in banks outside India.

I therefore request CBI to register the enclosed FIR, which catalogues of public

known allegations and instances involving bribery, kickbacks, money laundering an

violations currency and other national laws including tax laws and the person

known or suspected to be involved in such activities, and have the matt

thoroughly investigated.

I may add that all over the world, investigating agencies are working in clos

coordination and rendering utmost mutual assistance particularly after the G20 me

in April 2010 when the twenty leading economies of the world decided consensus to have financial transparency and break the tax havens into whic

illegal monies are stashed away by the buccaneers. The time is opportune f

commencing investigations into the subject matter of the FIR as the cooperation

other countries will be forthcoming unlike in the past.

We undertake to render any assistance that may be required.

Dr.Subramanian Swamy

Chairperson,

Action Committee Against Corruption in India (ACACI)


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Action Committee Against Corruption in

India (ACACI)(Championing Action Against Corruption)

A-77, Nizamuddin East, New Delhi 110013,

Phone: (011) 2435 7388

India

www.acaci.in

Chairperson

r. Subramanian Swamy

Members

hri A. Surya Prakash

hri AK Doval

hri J. Gopikrishnan

hri KN Govindacharya

hri K Sampath Iyengar

hri Prof. MD Nalapat

hri MR Venkatesh

hri Prof. R. Vaidyanathan

hri. Dr. S. Kalyanaraman

hri. S. Gurumurthy

hri Saryu Roy

hri V. Sundaram

Member Secretary

hri. Abhishek Joshi

First Information Report

Subject: A complaint under Prevention of Corruption Act, Prevention of Mone

Laundering Act, Foreign Exchange Management Act to be read with Sections und

Indian Penal Code against unknown offenders.

It is now a matter of common knowledge that very large sums of Indian money a

lying in tax havens all around the world. We received clinching evidence of th

same two years ago when the Government of Germany handed over to o

government a list of Indians, who were holding illegal accounts in LGT Ban

Liechtenstein. After it obtained this information, the Income Tax departme

proceeded against 18 such account holders and raised a total tax demand of R

24.26Crores. Subsequently, in recent months the government of India is in recei

of information about illegal bank accounts held by Indians in HSBC Bank, Genev

Switzerland. The Govt. of France has supplied a list of 700 such account holders

the Government of India. The IT department may be investigating these holding

but what is more important is the criminality of the act of creating and lodging illeg

assets abroad.

In the light of all this evidence the question before every citizen is what steps a

being taken by Indias investigating agencies against such persons who hav

stashed away illicit wealth abroad. Citizens also want to know how these monies le

Indian shores and landed in illegal accounts in Liechtenstein, Geneva and other ta

havens, as this flight of capital itself constitutes an offence that is worthy of a prob

by the premier investigating agency of the country.

There have been varying estimates of the quantum of Indian money in Swiss bank

and in banks in other tax havens. At the lower end there is a Global Financi

Integrity estimate which suggests that the amount involved could be half a Trillio

US Dollars. There are other estimates which put this figure to upwards of 1.5 Trillio

US Dollars. These recent disclosuresvis a vis

Indian illegal holding in one bank LGT and one bank in Geneva, is just the tip of the iceberg. Over the years there ha

been global investigation and collection of evidence on the flight of capital and th

proceeds of corruption from countries like India to tax havens across the world.

However it must be noted that apart from the private Swiss banks, there are th

corporate banks in Switzerland and Indian monies are lying in all of them. Further,

addition to banks in Switzerland there are banks in as many as 76 tax haven

spread across the world.


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The total deposits in all these banks are estimated to be a humongous USD 7 trillion as per Raymond Baker

Global Financial Integrity (GFI). Quoted in the report, these deposits relate to terrorist crimes, corruption

economic offences, drug related crime and tax evasion. Given the level of secrecy in all these banks

Switzerland and all these tax havens it is difficult at this juncture to come up with an exact figure in regard to th

funds that have moved out of the country and into these banks. However there can be no doubt on how the flig

of capital has taken place. It is largely through the hawala route, kick backs in deals and invoice mispricing

which is a crime under Foreign Exchange Management Act (FEMA).These also constitute offences under th

Prevention of Money Laundering Act (PMLA).

The enormity of the problem of flight of capital out of India, a large part of which relates to large scale corrupt

has been a matter of grave public concern in the country over the last few years. Shocked by the sheer size of

problem and blatant violation of laws and the unbridled resort to corrupt practices by those in government, t

Honble Supreme Court, felt it necessary to dwell on this problem at length in its ruling in ruling in Ram Jethmal

and Others 176 of 2009/I.A.No.1 of 2009 SC Vs Union of India and Others

In paragraph 4 of this judgment, the Honble Court has said, The worries of this Court that arise, in the contex

the matters placed before us, are with respect to transfers of monies, and accumulation of monies, which a

unaccounted for by many individuals and other legal enti ties in the country, in foreign banks. It said The worr

of this Court relate not merely to the quantum of monies said to have been secreted away in foreign banbut also the manner in which they may have been taken away from the country, and with the nature

activities that may have engendered the accumulation of such monies.

The honorable Supreme Court in the judgment cited above has also expressed itself strongly at the way t

government and its agencies have been responding to this steady flow of information about unaccounted monies

foreign banks. It has pointed out that this activity which has a bearing on national economy and national secu

cannot be treated merely as a case of tax evasion. Illegal appropriation of public funds and criminal misconduc

the account holders, as has been proven in the case of Hasan Ali, needs to be thoroughly investigated. As per t

opinion of the Court, in Paragraph 5 of this judgment, the court has said, First and foremost, such large mon

stashed abroad, and unaccounted for by individuals and entities of a country, would suggest the necessity

suspecting that they have been generated in activities that have been deemed to be unlawful.

The disappointment of the court with the response of the Indian State and investigating agencies to availa

evidence of illicit bank accounts is best explained by its observations in this regard, in Paragraph 8 of t

judgment. The court observed, Unaccounted monies, especially large sums held by nationals

entitiesclearly indicate a compromise of the ability of the State to manage its affairs in consonance with w

is required from a constitutional perspective.

The court has said the quantum of such monies by itself indicates that a large volume of activities in the social a

economic sphere within the country are unlawful and are causing great social damage.

A substantial degree of incapacity, in the above respect, would be indicia of the degree of failure of the State.

The apathy or even possible connivance of persons in power to the whole business off light of capital from In

has over the decades emboldened unscrupulous persons in the country. The climate of lawlessness and

complete absence of scruples in the political arena has translated into large scale corruption at various leve

There can be no better example of the monumental failure of the Indian state to ensure governance in a fair a

objective manner than the 2G Spectrum Scam that has resulted in a staggering loss of Rs 1.76 Lakh Crores to

Indian exchequer (nearly 3% of the Indian GDP) This is considered to be mother of all scams but there a

hundreds of others, all of which have resulted in a large scale loot of public funds.


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It is estimated that one part of this tainted money has moved into real estate and other illegal activities within

country but that a substantial part of it has moved abroad to bank accounts in tax havens.

All available evidence suggests that a good portion of the money in various tax havens belongs to Indians, this is

national shame.

There is another far more sinister dimension to the flight of capital from India and the opening of illicit ba

accounts in Switzerland and other tax havens. This aspect has been highlighted by Mr. M.K. Narayanan, form

National Security Advisor to the Government of India. Addressing the 43 rd Munich Conference on Security Po

on February 11, 2007, Mr. Narayanan referred to the various ways in which terrorists in India were being fund

He said: Instances of terrorist outfits manipulating the stock markets to raise funds for their operations have be

reported. Stock exchanges in Mumbai and Chennai have, on occasion, reported that fictitious or notio

companies were engaging in stock market operations. Some of these companies were later traced to terro

outfits.

This concern of Mr. Narayanan is also shared by the Supreme Court. In Paragraph 4 of Ram Jethmalani a

Others 176 of 2009/ I.A.No.1 of 2009 SC Vs Union of India and others, the court asserts, The worries of this Co

are also with regard to the nature of activities that such monies may engender, both in terms of the concentration

economic power, and also the fact that such monies may be transferred to groups and individuals who may u

them for unlawful activities that are extremely dangerous to the nation, including actions against the State.

It is obvious that a substantial part of the Illicit Indian money in foreign banks relates to corruption and to the k

backs obtained abroad on contracts awarded by the Union Government and State governments. These kick ba

constitute an offence under the Prevention of Corruption Act (PCA) 1988 and involve host of Public Servants a

Politically Exposed Persons (PEPs). Besides public Servants, the members of the corporate world and

businessmen who collaborated or facilitated these deals are all conspirators in these crimes under the Prevent

of Corruption Act.

It is generally believed that since independence there were kick backs in all government deals. However in rece

times this is no longer mere hearsay. We now have authentic information on how kick backs are collected and t

has been substantiated by several persons who have held high offices in the country, including President

Venkataraman, former Cabinet Secretary B.G.Deshmukh and former Governor of Jammu and Kashmir, Mr. B

Nehru. Mr. Deshmukh who was Cabinet Secretary when Mr. Rajiv Gandhi was Prime Minister, has explained t

genesis of collection of kick backs outside the country by Indian politicians who took decisionswith regard

government contacts. On Page 217 of his memoirs, titled Cabinet Secretary Looks Back, he describes t

process in detail; the genesis of the Bofors affair lies in the practice initiated by Indira Gandhi and further refin

by her son Sanjay for collecting funds for the Congress Party. No doubt the Congress party and other polit

parties in India have needed funds mostly to fight elections from 1947 when the country became independent.

the middle of 1960s, during the regime of Pandit Jawaharlal Nehru, collection of funds for the party was a mo

transparent business and Business Houses were also permitted to make open donations. Collection of funds

ones party was then not a highly competitive and corrosive practice corrupting the whole social, economic apolitical fabric as happened later. Indira Gandhi at the very beginning of her tenure as Prime Minister found t

she was in dire need of funds to fight elections to establish herself as the undisputed leader of the Congress Pa

As I was then in Maharashtra, I know that in that state she depended heavily on her loyal supporters Rajni Pa

and Vasant Rao Naik to raise funds and they did this by literally selling sheets of sea water in the Nariman Po

area. Later, when she established her supremacy in Indian politics, she decided that a far better way to coll

funds for the party was through claiming cuts from foreign deals. Sanjay Gandhi perfected and refined this

further from 1972 onwards.


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When she came back to power in 1980, I was additional secretary in the Ministry of Home Affairs. My colleagu

told me that in January 1980 itself, Sanjay Gandhi called senior officers from certain concerned ministries for giv

orders and making deals and clearly and firmly told them how they should be finalized. Trusted senior officers w

posted to ministries such as defense ministry and also to Department of Defense Production.

According to Mr. Deshmukh this arrangement of collecting kickbacks from foreign deals continued even after

tragic demise of Sanjay Gandhi in mid-1980. This point of view is further corroborated by Mr. R. Venkatraman w

was President of India from 1987 to 1992 on Page 40 of his autobiography titled My Presidential Years. M

Venkataraman makes the following observation: JRD Tata made a courtesy call on me---------------- commen

on Rajiv Gandhis statement on Bofors----- it will be difficult to deny the receipt of commission by the Congre

Party. He felt that since 1980, industrialists had not been approached for political contributions and that the gene

feeling amongst them was that the party was financed by commissions on deals. Apart from these invalua

observations from persons who have held high offices the CBI itself is in possession of clinching evidence

commissions paid on various deals including defense and power sector deals in particular.

Bofors is a case in point. The CBI was handed over bank documents by the Swiss authorities which establish

payment of a commission of USD 7.3 Mn by the Swedish arms company, Bofors to the account of Mr. Ottta

Quattrocchi and his wife Maria Quattrocchi, friends of Rajiv and Sonia Gandhi. This payment was made soon a

India signed the deal with Bofors for purchase of 155 mm field guns when Mr. Rajiv Gandhi was the Prime MinistThe Income tax appellate tribunal, the highest judicial body on tax matters, has held that commissions have be

paid to Win Chadha and Quattrocchi.

In its order dated December 31, 2010, the Income Tax Appellate Tribunal (ITAT) named Quattrocchi and W

Chadda as recipients of commissions from Bofors. It said the first clear evidence of commissions or kickbacks p

by Bofors emerged in the June, 1987 report of the Swedish National Audit Bureau (SNAB) which said t

commission payments were made to those who took care of the Bofors deal with India. On Quattrochchi, the IT

said that despite the Indian Governments insistence not to appoint or pay any agent, Bofors entered into a fre

consultancy agreement with M/s. AE Services Limited of U.K. on November 15, 1985 at the behest of one M

Ottavio Quattrocchi, an Italian. According to this agreement, if Bofors was awarded the contract before March

1986, it was to pay a fee equivalent to 3% of the total value of the contract pro rata with the receipt of payments. By a strange coincidence, the Bofors-India contract was signed on March 24, 1986, just a week befo

the expiry of the deadline. Bofors deliberately suppressed the fact of this agreement in their letter dated March

1986 to the Indian Ministry of Defense.

Based on bank documents obtained from Switzerland by Indian authorities, the tribunal concluded that after In

paid Bofors SEK 1,682,132,196.80 (Rs.29, 615 lakhs), equivalent to 20% of the contract value, on May 2, 198

Bofors remitted a sum of SEK 50,463,966 (equivalent to USD 7,343,941.98), on September 03, 1986, to A/c N

18051-53 of M/s. A.E. Services Limited at Nordfinanz Bank, Zurich. This Account of M/s. A.E. Services Limited h

been opened only a fortnight earlier, on August 20, 1986. The amount paid to A.E Services worked out to

exactly 3% of the amount of advance paid by to Bofors and was, thus, perfectly in accordance with the terms

out in the A.E. Services Ltd. Bofors Agreement.

Thereafter, the ITAT provided details of the money trail. The transfer of funds by Quattrochchi from this company

the accounts of other companies in other banks, all of which were operated by Ottavio Quattrocchi and his w

Maria is fully outlined. The tribunal also noted that while opening the Account of Colbar Investments Ltd. Inc. w

the Union Bank of Switzerland, Geneva on March 30, 1984, Ottavio Quattrocchi had mentioned his address

India as Colony East, New Delhi/ India, which was a fake and non -existent Address. Similarly, Indian authorit

gathered valuable documentary evidence from Switzerland in regard to payments made to the Indian age

Mr.Win Chadhas company .


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Further, in the later part of the 1980s, it was common knowledge that a huge kick back was paid to Ind

politicians by the German submarine manufacturing company, HDW when India purchased 4 submarines. It w

estimated that the kick backs paid were to the extent of 7% of the contracted value of the deal. Even this fin

corroboration in the memoirs of Mr. Deshmukh.

On page 218 of his memoirs, Mr. Deshmukh says, I might also add that the practice of getting kick backs earn

us notoriety in foreign countries. In the HDW Submarine Case, I was told that the West German Defense Minis

had intimated to the German defense supplier the amount of commission that would be required to be paid

selling the defense equipments. The Latin American and African countries were in the bracket of 10% and abo

whereas we were placed in the bracket of 5% to 10%. Incidentally, this clearly shows how cynical develop

countries are in selling their defense products

The black money that is generated and received inside the country is partly kept in India in various forms and

partly taken abroad. That a lot of tainted money is collected for political purposes has been validated by vario

persons who have had an insight into decision making at the highest level in the country. Mr. B.K. Nehru, form

Indian ambassador to the United States and former Governor of several states was among those who kn

something about collection of funds for political parties. On page 582 of his memoirs Nice Guys Finish Second,

refers to a conversation he had with his nephew Rajiv Gandhi a day after Sanjay Gandhis funeral in June, 1980

asked Rajiv whether the money Sanjay had collected allegedly for the Congress was safe. He said all they foundthe almirah of the Congress Office was Rs. 20 Lakhs. I asked how much Sanjay had collected. He held his head

his hands and said Crores and unaccounted Crores.

The KGB and its hold on RussiaPast Present and Future authored by Yevgenia Albats (published by Far

Straus -Giroux - NY- states quoting from KGB archives ( on page 223) as follows -A letter signed by Vik

Chebrikov, who replaced Andropov as head of the KGB in 1982 ,noted the USSR KGB maintains contact with t

son of Premier Minister Rajiv Gandhi (of India) Rajiv Gandhi expresses deep gratitude for benefits accruing

Prime Ministers family from the commercial dealings of an Indian firm he controls in cooperation with Soviet fore

trade organizations. Rajiv Gandhi reports confidentially that a substantial portion of the funds obtained through t

channel are used to support the party of Rajiv Gandhi. We feel that the illicit funds accumulated by Indians abro

are not just a matter of taxation. Domestic black money is no-confidence in the Government but black money kein foreign banks is no confidence in the country and hence a form of treason.

Apart from the clinching evidence of commissions paid by Bofors to the friend of our Prime Minister in the m

1980s and the revelations in Mr.Albaats book, we also have startling revelations made by a popular Sw

magazine all of which lends credence to the fact that Indian politicians and their cohorts took commissions a

bribes on contracts awarded to foreign entities and ensured that these funds were remitted to their accounts

Swirzerland and other tax havens.

In its issue of November 19, 1991, Schweizer Illustrierte, a magazine of Switzerland with a readership close to o

million did an expos of over a dozen politicians of the third world who had stashed away their bribe monies

Swiss banks. Citing the newly opened KGB records, the magazine reported that Sonia Gandhi the widow of former Prime Minister Rajiv Gandhiwas controlling secret account with 2.5 billion Swiss Francs (equal to USD

billion) in her minor sons name. The USD 2.2 billion account must have existed prior to June 1988 when Ra

Gandhi attained majority. At current foreign exchange rates, its value would be Rs 11,400 crore.

Over the years the transfer of illegal wealth has been done through the hawala route. Apart from this, kick bac

from corruption and mispricing of invoices in foreign trade transactions has led to accumulation of illicit monies

tax havens. Whatever be the reason for generation of these funds, carting it abroad is an offence under FEMA.

citizens who illegally divert funds to foreign shores are guilty of offences under this law. Where ever such funds a

linked to corruption, arms deals, drug trafficking etc the Prevention of Money Laundering Act comes into play.


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Since all these offences are committed behind a veil of secrecy, these are not ordinarily known to the public. T

world over, be it Germany in the LGT Case, France in HSBC or USA in the UBS affair, the facts have be

uncovered by the intelligence wings of Union Government Departments or investigative agencies.

These offenders are all unknown person but the transactions conducted by them can be traced and identified

the Economic Intelligence Units of Government of India, Intelligence organizations or the CBI on its own or throu

its contacts in Interpol. After tracing the transactions, it can work backwards and link it to the offenders.

There is a demand across the country for vigorous investigation of illegal assets of Indian citizens outside

country. In lodging this complaint, the Action Committee Against Corruption in India (ACACI) is hoping that this

trigger necessary action on the part of the CBI. As the Supreme Court has observed in the above mention

judgment; The merits of vigor of investigations, and attempts at law enforcement, cannot be measured merely

the scale of what we accomplish with respect to what has happened in the past. It would necessarily also have

be appreciated from the benefits that are likely to accrue to the country in preventing such activities in the future

In view of the above and in particular, in view of the observations of the Supreme Court and all the Referenc

cited above, the Action Committee Against Corruption in India (ACACI) is hereby lodging a formal complaint at t

juncture because it feels that enough is enough and no more of this draining and bleeding of the nation can

allowed to continue .The time has come when the need is to take direct action. A clutch of recent developme

have made this the most appropriate moment for concerned citizens to initiate this complaint.

The Action Committee Against Corruption in India (ACACI) requests through the Director, for CBI to registe

criminal case under relevant sections of the Prevention of Corruption Act (PCA), the Prevention of Mon

Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA), read with Section 120B of the Ind

Penal Code (IPC) against unknown persons and cause investigations, collect evidence and charge sheet

offenders.

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