New Delhi: India’s ability to get information about its residents who have stashed away money in overseas tax havens may be compromised because of an alleged leak by the Central Bureau of Investigation (CBI).
The financial intelligence unit (FIU), the government agency that liaises with its counterparts from other countries in the global Financial Action Task Force (FATF), is worried that the latter will, at the least, rap it on the knuckles, or, at the worst, take stronger action for sharing information that it shouldn’t have.
FATF, which has around 130 members, is an inter-governmental body which sets standards and develops and promotes policies to combat money laundering and terrorist financing.
FIU isn’t allowed to reveal the source of information or make public the details without obtaining a waiver from either FATF or the country from which the information is sourced.
In early September, a story in The Indian Express quoted unnamed sources saying that FIU had obtained information that Kadapa member of Parliament and Congress rebel Jagan Mohan Reddy had moved Rs 100 crore through a bank in Luxembourg, and passed on the information to CBI and the Enforcement Directorate (ED). Reddy denied any such transaction in Luxembourg in that story and said he was the victim of a witch-hunt.
FIU believes the information was leaked by CBI and says it has taken up the matter with the agency, said an FIU official, who did not want to be identified. A second FIU official independently confirmed this.
A top CBI official denied having received any complaint from FIU. “We are not aware of any such allegations and no one has spoken to us,” this person said, asking not to be identified.
The second FIU official countered this: “The issue was raised with CBI but nobody wants to own up. They have not understood the gravity of the matter.”
The development comes at a time when Indian investigating agencies are looking to source information from tax havens in some of the high-profile cases involving firms and politicians.
S.D. Pradhan, former deputy national security advisor, said lack of coordination among agencies may end up jeopardizing India’s chances of getting sensitive information from foreign sources. “It seems that some one, out of enthusiasm, or inadvertently, leaked information to media. It is not desirable. Had FIU told CBI or ED that information should not be leaked or shared with anyone else, the agencies would have kept utmost care.”
The issue isn’t one of publicising the information, said the second FIU official. Had any of the investigating agencies obtained a court order on the basis of the information, FIU could have written to FATF and the country providing the information with the court order and sought permission to publicise the information.
The two FIU officials said they received information on the Luxembourg account in April, asked for the account to be frozen for 90 days, and informed CBI and ED. Since neither agency produced a court order within this period saying the money in the account could be the proceeds of corruption, the account was reactivated soon after, they added.