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Pressure grows for India to bring back 'black money' stashed overseas

The embattled Indian government says the challenge is getting notorious tax-haven nations to help. But international experts say the most common obstacle nations face in trying to recover money is their own governments.

By Staff writer / June 14, 2011

Supporters of India's yoga guru Swami Ramdev participate in a regular "puja" or religious ceremony after Ramdev ended his fast against corruption in the northern Indian town of Haridwar on Sunday. Ramdev called off his eight-day-old hunger strike to denounce corruption after a prominent spiritual figure persuaded him to end his action, local media said.

Vivek Prakash/Reuters

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Swami Ramdev, the Indian yoga master turned anticorruption campaigner, ended his protest fast over the weekend, but not without spurring popular pressure on the government here to recover so-called black money.

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Black money includes embezzled government funds, private money hidden from tax collectors, and the profits of illegal enterprises. Nearly 464 billion dirty dollars have left India since its independence, according to an estimate by the Global Financial Integrity watchdog group in Washington.

Indians want all that loot back.

Once illicit assets leave Indian shores, however, it’s extremely difficult to get them back, even with an international treaty for that purpose.

The embattled Indian government says the challenge is getting notorious tax-haven nations to help. But international experts argue the most common obstacle nations face in trying to recover money is their own governments.

“Governments are often voted in on the basis that they will fight corruption,” says Tim Daniel, a partner with Edwards Angell Palmer & Dodge, a London-based law firm. “But after a couple of years they begin to lose interest because they realize that these [black] moneys are amassed by people who were responsible for bringing them to power.”

So far, the Indian government has convinced few people that they are serious about cracking down on corruption and recovering black money.

Corruption activists going rogue

As a result, anticorruption activists have started going rogue. Mr. Ramdev spoke of raising an “army” of youths – unarmed, he later clarified – to protect him in case the police once again attacked one of his rallies. The comments raised eyebrows in Indian media, but paled in comparison to statements made at an April convention held by Transparency International India at the Habitat Center, a staid den of polite society here.

One speaker, a former income tax commissioner named Vishwa Bandhu Gupta, lamented that during the 2001 terrorist attack on Parliament some policemen gave their lives to save “these scoundrels.” He claimed another problem was that most Indian media has been bought off.

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Many in the audience cheered and offered drastic remedies. One suggested it was time for the Army to take over and clean house. Another spoke of creating a paramilitary army to target the corrupt.

Feeding off such energy, Mr. Gupta suggested it was time to boycott Switzerland, a country where Indians suspect much of the black money is stashed in secret accounts.

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