India 3rd on black money list, $440bn flows out in 10 years-Times of India 17.12.2014
WASHINGTON: As India continues its pursuit of suspected black money stashed abroad, an international think-tank has ranked the country third globally with an estimated $94.76 billion (nearly Rs 6 lakh crore) illicit wealth outflows in 2012.As a result, the cumulative illicit money moving out of the country over a ten-year period from 2003 to 2012 has risen to $439.59 billion (Rs 28 lakh crore), as per the latest estimates released by the Global Financial Integrity (GFI).
Russia is on the top with $122.86 billion, followed by China at the second position ($249.57 billion) in terms of the quantum of black money moving out of a country for 2012 — the latest year for which these estimates have been made.
The Washington-based research and advocacy group further said that the illicit fund outflows from India accounts for nearly 10 per cent of a record $991.2 billion worth illegal capital that moved out of all developing and emerging nations in 2012 to facilitate "crime, corruption, and tax evasion".
As per GFI's 2014 Annual Global Update on Illicit Financial Flows report, that the cumulative illicit outflows from developing economies for ten years between 2003 and 2012 stands at $6.6 trillion.
This includes $439.59 billion worth illicit money that has moved out of India in these ten years, putting the country at fourth position in overall ranking for a decade, after China ($1.25 trillion), Russia (973.86 billion) and Mexico ($514.26 billion).
In these ten years, an average of $43.96 billion of black money is being sent out of India every year, GFI said.
The estimate of these huge illegal money flow follows a Supreme Court-constituted Special Investigation Team (SIT) tracing Rs 4,479 crore in the accounts of Indians figuring in a list of account holders of HSBC's Geneva branch.
Besides, the SIT has also disclosed tracing unaccounted wealth worth Rs 14,958 crore within India, which are now being investigated by the Enforcement Directorate and the Income Tax Department.
The issue of black money has been matter of a serious political debate in India, including during the last general elections. While the new government has said it is committed to tackle this menace, there are no official figures for the overall size of illicit wealth stashed by Indians within the country or abroad.
http://timesofindia.indiatimes.com/india/India-3rd-on-black-money-list-440bn-flows-out-in-10-years/articleshow/45530949.cms
I fully agree that RBI should appoint auditors for conducting statutory audit of various banks and CA should be held responsible, accountable and punishable if they fail to point out the fraudulent and illegal behavior of bank management. Auditors least bother of faults or fraud committed by banks because it is ultimately banks who will appoint them and pay them charges and extend comforts as per their desire.
Similarly in case of audit of private businessmen and service class people, auditors prepare good balance sheet ignoring all bad points so that they may be paid attractive fees. The more fees they charge, the more auditors will guide ways of tax evasion, concealment of facts related of violation of laws, avoidance of statutory provisions etc.
In brief I can say that auditors are best blackmailers and they can go to any extent against the interest of the government if they are adequately compensated for their advices. It is seen that some auditors prepare balance sheet as per need of the businessmen who are inclined to avail higher amount of loans from banks. These CAs almost works as agent of businessmen and it is they who motivate bank officials for inflated lending in return of attractive bribe money.
As of now none is held responsible for the act of omission and commission. Banks blame auditors and auditor's blame banks for ongoing and perpetual fraudulent activities undertaken by bank management. Auditors are paid huge amount for auditing but they seldom check into records of banks and try to complete statutory audit even at big branches in a day or two even though they claim the bill for three or four days..
It is only when Branch Manager of a branch fails to give best quality of hospitability to auditors or fail to give precious gifts to some corrupt and greedy auditors that auditors try to teach lesson to bank officials and mention even non-mentionable irregularities in their audit report. Similarly at regional or zonal or corporate level various officers of the bank are entrusted the duties of entertaining, hotelling, visiting picnic spots and gifting the team of auditors to get best rating and best reports ignoring all vital information. I have seen many auditors even calling branch officials in hotel with money and gifts and signing financial reports blindly.
Unfortunately RBI officials also do not want to have headache of process of appointment and then controlling of auditors. Banks are violating important rules and laws in concurrence with RBI officials. Assets are not classified as per RBI norms of assets classification and income is booked against income recognition norms set by RBI and for this purpose auditors, bankers and regulating agencies dance as puppet of businessmen who spend money for getting illegal benefits from bank, from government and from RBI. As such even if duty of appointment of auditors is restored to RBI, corruption is not going to end. As long as actions are not taken against evil doers, there will not be any fear in the mind of neither bankers nor auditors.
Million dollar question is who will bell the cat? All are birds of the same feather. Money and only money play the role. The more the bribe is offered, the shorter becomes the eyes and ears of auditors, and also that of all regulating and investigating agencies.
Auditors do not perform auditing to safeguard rule of law and ensure following of accounting principles or for tax compliance in true spirit but play the role of mediating between borrowers and bankers, between tax officials and tax evaders and between law makers and law breakers.
It is auditors who prepares financial statement suitable for sanction of certain amount of loan and who motivates bankers for sanction of the same. It is auditors who teaches businessmen how to avoid payment of taxes and who motivate tax assessing authority to put their signature on assessment orders.
Bankers similarly do not care for safety of their bank but work for self interest. Tax officials do not work for collecting maximum revenue in line with prevalent laws but to help tax evaders so that he or she can get his share through backdoor.
It will not be an exaggeration to say that it is auditors who help in creation of black money in the country in nexus with tax officials and it is again auditors who in nexus with bankers and businessmen help in creation and accumulation of more and more bad assets in bank’s loan portfolio.
All individuals, firms and companies who have parked their ill earned money or black money in domestic or foreign banks, private or public sector banks or who have concealed money in lockers or invested in real estate have got success in obtaining the signature of tax officials on assessment order related to their financial statement and profit and loss accounts. All borrowers who defaulted in repayment of bank loan or all bankers who are worried of rising Non Performing Assets know very well that accounts of borrowers were duly certified by Chartered Accountants assessed by top ranked bank officials and Internal auditors before the decision on sanction of credit was taken in favour of any loan seeker.
India third on black money list: report-The Hindu-17th December 2014
As India continues its pursuit of suspected black money stashed abroad, an international think-tank has ranked the country third globally with an estimated USD 94.76 billion (nearly Rs 6 lakh crore) illicit wealth outflows in 2012.
As a result, the cumulative illicit money moving out of the country over a ten-year period from 2003 to 2012 has risen to USD 439.59 billion (Rs 28 lakh crore), as per the latest estimates released by the Global Financial Integrity (GFI).
Russia is on the top with USD 122.86 billion, followed by China at the second position (USD 249.57 billion) in terms of the quantum of black money moving out of a country for 2012 — the latest year for which these estimates have been made.
The Washington-based research and advocacy group further said that the illicit fund outflows from India accounts for nearly 10 per cent of a record USD 991.2 billion worth illegal capital that moved out of all developing and emerging nations in 2012 to facilitate “crime, corruption, and tax evasion“.
As per GFI’s 2014 Annual Global Update on Illicit Financial Flows report, that the cumulative illicit outflows from developing economies for ten years between 2003 and 2012 stands at USD 6.6 trillion.
This includes USD 439.59 billion worth illicit money that has moved out of India in these ten years, putting the country at fourth position in overall ranking for a decade, after China (USD 1.25 trillion), Russia (973.86 billion) and Mexico (USD514.26 billion).
In these ten years, an average of USD 43.96 billion of black money is being sent out of India every year, GFI said.
The estimate of these huge illegal money flow follows a Supreme Court—constituted Special Investigation Team (SIT) tracing Rs 4,479 crore in the accounts of Indians figuring in a list of account holders of HSBC’s Geneva branch.
Besides, the SIT has also disclosed tracing unaccounted wealth worth Rs 14,958 crore within India, which are now being investigated by the Enforcement Directorate and the Income Tax Department.
The issue of black money has been matter of a serious political debate in India, including during the last general elections. While the new government has said it is committed to tackle this menace, there are no official figures for the overall size of illicit wealth stashed by Indians within the country or abroad.
As per GFI estimates, the amount of illicit funds that moved out of India in 2012 was much lower than the same for neighbouring China, as also Russia.
“ illicit financial flows are the most damaging economic problem plaguing the world’s developing and emerging economies”
These three countries are followed by Mexico at the fourth place (USD 59.66 billion) and Malaysia at fifth (USD 48.93 billion).
Authored by GFI chief economist Dev Kar and GFI Junior Economist Joseph Spanjers, the study further said that illicit financial flows of a record high USD 991.2 billion in 2012 marks a dramatic increase from 2003, when size of such funds stood at USD 297.4 billion.
Over the decade (2003-2012), the study found that illicit financial flows are growing at an inflation-adjusted average rate of 9.4 per cent per year.
However, in many parts of the world, particularly in the Middle East and North Africa (MENA) and in Sub-Saharan Africa, illicit flows are growing at an average annual inflation-adjusted rate of 24.2 and 13.2 per cent, respectively.
“As this report demonstrates, illicit financial flows are the most damaging economic problem plaguing the world’s developing and emerging economies,” GFI president Raymond Baker said.
“These outflows-already greater than the combined sum of all FDI and ODA flowing into these countries — are sapping roughly a trillion dollars per year from the world’s poor and middle-income economies,” he said.
However, the troubling fact is that these outflows are growing at an alarming rate of 9.4 per cent per year, which is twice as fast as global GDP, Baker noted.
According to him, it is simply impossible to achieve sustainable global development unless world leaders agree to address this issue head on.
“That’s why it is essential for the United Nations to include a specific target next year to halve all trade-related illicit flows by 2030 as part of post-2015 Sustainable Development Agenda,” he said.
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