Q. Mr Rohatgi, this morning the government handed over to the Supreme Court in a sealed envelope the names of 627 people given by HSBC bank. Why have you not submitted the 612 names which the press has said have been given to the government reportedly by the International Consortium of Investigative Journalists?
A: Karan, the government of India got from the government of France a list of 627 names which emanated from HSBC Geneva, which had been stolen by an employee. But we got it from the government of France. Based on Double Taxation Avoidance Treaty which has a clause of confidentiality and so on. But the answer to your question is that what was required by the court and what is being investigated by the SIT are these 627 names. There is not authenticity whatsoever attached to some 600 names from an organisation which you have just mentioned and therefore what is in contemplation are these names, which are undergoing a verification in an inquiry. Because some of these accounts may be genuine and some of these may be legal and some may be illegal.
Q. Does the government have names from other sources which you have not shared with the court because you don't believe they are authentic or verified?
A. No. Let me tell you. You must understand the parameters of this kind of investigation. Just for information, one of the three names which was disclosed before yesterday was a name which we had got from another government, which did not occur in the list of 627. So it is not only that we are getting 627 names, we are constantly getting information from different governments. That is also verified. It's an ongoing practice. There are lakhs and hundreds of entries of transactions which are passed on by some governments, which are verified. In many cases, even students opening accounts in England and so on and so forth are informed. Those are routine. They are seen and they are junked. Therefore, the name we got from one particular government under another treaty which is called or the type of information exchanged is called spontaneous, which means we can only make a request.
Q. Let's not get lost in technical details. Newspaper reports claim that the chief justice had asked for all names given by all countries and all sources to be made available. Was that the case or the newspaper reports inaccurate?
A. The reports are inaccurate. The chief justice asked for the names from Germany, which are famously called 26 accounts from Lichenstein and the list from HSBC. There are no other lists except these two. The first one has since been made public in the month of May 2014, pursuant to the orders of the Supreme Court. The second list is the one that is engaging the attention of the court, the SIT and the government of India. That along with an updated status list or a status report for the 627 names has been submitted to the Supreme Court in a sealed cover today.
Q. Now the Supreme Court has handed the names to SIT the same sealed cover. What assurance do you have that the SIT won't make the names public? Prashant Bhushan, one of the petitioners in this case, has gone public today to say that we will petition the SIT to make the names public. Or, are you worried the SIT may make them public?
A. We have no assurance from anybody, but he makes that plea, as we have said, these names were with the SIT from June 27. So they will get a duplicate list from the Supreme Court. We have nothing to hide, but we will request the SIT not to disclose all names, because they will be in breach of the confidentiality clause of almost all Double Taxation Treaties. The treaties provide that once the investigation is complete, and you have separated the grain from chaff namely that such and such accounts are tainted or have ill-gotten money, then those accounts can be declared in the tax court, which means public, and therefore they should be made public. The right of privacy of genuine account holders should not be made public. That is the treaty and that is the judgment from the Ram Jethmalani case itself.
Q. The names were also supposed to be shared with agencies such as the Enforcement Directorate and the CBI. What is the danger that they could leak? You know and I know that the ED and the CBI are notorious for leaking.
A. Now, Karan, I cannot say whether it will be leaked by one department of the other, but presently the list is with the SIT, in fact from June. Till now, the end of October, they have not been leaked. The SIT is very responsible body with officers from various departments and I am sure they will take all steps to maintain secrecy as required by law and declare names as required by the treaty, as and when the time comes.
One more important reason, I must tell you. The income tax department is bound to complete all investigation and all assessments under the Income Tax Act for undisclosed income by March 31, 2015, of all these accounts because the limitations will run out. It is not open ended and will end in 4 months from today. You will know what the truth is.
Q. The problem is that you are confident and hopeful, but you have no guarantee that the SIT will not make the names public. On the other hand, point something else out to you. When yesterday in court you asserted the importance of confidentiality, the chief justice actually scoffed at it. He said, "Don't give such certificates of confidentiality". He then added that court will deal with breach of confidentiality if it happens. That's not a very reassuring indication from the Chief Justice of India. It suggests that if the SIT were to make the names public, he wouldn't stand in their way.
A. Your assessment, I respectfully say, is completely erroneous. First thing, that everybody needs to understand is exchanges in open court between the bench and the bar, do not constitute any view or a judgment of the court.
Q. Headlines Today has reasons to believe that you may have already breached the confidentiality in the Swiss Double Tax Avoidance Agreement. We have a written communication from Anne Cesar of the department of finance in the Swiss government in Bern. It says: "The information exchanged under the terms of DTAA can be provided to a court in situations where it is dealing with a specific case related to tax matters for which this information is relevant. Conversely, information cannot be disclosed in principle to a court or any other body outside of court proceedings." Now, you have released names not connected to a specific case. Isn't this already a breach of the Swiss DTAA?
A. Whether we are, or are not in breach is a separate question. I have not seen the letter and I cannot deliberate upon it. But one thing, after the Supreme Court directed eight genuine accounts also to be disclosed from Lichenstein in the month of May 2014, we got a letter from German authorities as to why the names had been disclosed and we are supposed to give an explanation. We don't want a repeat of that situation, and that is why we went to court yesterday.
Q. How serious a breach is the breach of confidentiality clause, in terms of the DTAA?
A. I will answer it in two parts. Firstly, giving documents in a sealed cover to a court cannot be deemed to be a breach of the confidentiality agreement because the court did not even look at it. Secondly, if a breach actually occurs and we are unable to give a satisfactory explanation to the reciprocating court, then it is possible that that reciprocating state may either refuse to deal with us and give us further information, but certainly information will dry up. Our concern is if the information dries up, the question of unearthing black money abroad will become absolutely impossible and it will become counter-productive to Mr Ram Jethmalani's case.
Q. In this case...
A. There are 627 specific cases. Secondly, a sealed cover given cannot termed as a disclosure.
Q. If you are deemed to have breached, what impact will have on the additional 7-8 DTAAs that you are negotiating with these 7 or 8 countries?
A. Obviously, it will have a deleterious impact for India.
Q. If the government cannot guarantee confidentiality, how will this impact the Foreign Account Tax Compliance Act with the US, which you are required to comply by December 31. If you cannot comply with the FATCA by December then starting January 1, Indian financial institutions in America will be subjected to sanctions and more worryingly, all remittances from America to India could become subject to 30 per cent withholding of tax? Can you confirm those?
A. You are absolutely right. If we are unable to have an ink covered treaty with them the effect will be withholding tax levy of 30 per cent. We are worried that we should not be seen as an authority or country which breaches it. I explained the same to Supreme Court. We requested our grievances to the two retired judges of the court who are heading the SIT. A relook by the Supreme Court has not been prohibited by the order made today.
Q. Interesting. The court may have a relook after the SIT submits it report. So, the remittance of 30 per cent withholding tax will not only apply to individuals who want to send money to family, but all investment in India by American companies will become subject to 30 per cent withholding tax. Is that right?
A. That is right.
Q. A $100 investment by an American company in India will have to become $130.
A. Yes, you are right. This adverse impact will happen.
Q. If the names of people of legal accounts are revealed, wouldn't it infringe their rights under Article 21?
A. You are absolutely right. In fact, right of privacy is a fundamental right, and people who have genuine accounts with no wrongdoing. They have a right to not to have their names disclosed in newspapers or flashed across television screens. It is for that reason we are verifying all 627 accounts to separate the grain from the chaff.
Q. Who in your opinion is correct, the Supreme Court judge in his loud thinkings or he, finance minister Arun Jaitley, in his interviews?
A. Both have their rights to air their views. Judgments are only delivered after the due deliberations of the law. Loud thinking or exchange of thoughts are not judgments.
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