Black money:Govt denies link b/w terror outfits and stock mkt

New Delhi, Aug 11 (PTI) Government on Tuesday ruled
out any surreptitious entry of terrorist outfits into the
stock market and said sufficient caution have been
administered to the stock exchanges to look out for any
suspicious entry into their activity.

"The Government, at present, does not have any
reliable, credible information of any surreptitious entry of
terrorist outfit into the stock market," the Department of
Revenue said in a fresh affidavit to the Supreme Court which
is hearing the issue relating to stashing away of black money
by Indians in foreign banks.

"However, the Board (Security and Exchange Board of
India) as well as stock exchanges have been administered
sufficient caution to look out for any suspicious and
irregular entrant into the stock market activity," said the
affidavit filed in response to the PIL accusing the government
of not taking action in bringing back black money stashed in
foreign banks.

The PIL filed by eminent lawyer Ram Jethmalani and
others had referred to the media reports alleging a link
between money belonging to Indian citizens lying deposited in
foreign banks and terrorist fundings.

"Upon enquiry, it has been confirmed by the Bombay and
Chennai Stock Exchanges that no fictitious or notional
companies can be stated to be involved in stock market
operations," the second affidavit filed in response to the PIL
said.

The government elaborated on the mechanism for
regulating the flow of money coming into the stock market
through Foreign Institutional Investors (FIIs) by SEBI and
ruled out the possibility of banning participatory notes.

"In view of the fact that participatory notes are
market instruments and when they are created and traded abroad
it is not possible to ban the issue of the said instrument,"
it said adding they are subjected to regulations and
effectively being regulated by SEBI.

The Centre said all FIIs are mandated to report at the
end of every month all the informations relating to
participatory notes issued by them including the names of the
subscriber to the said participatory notes.

However, the Centre agreed that there is a possibility
of misuse of double taxation treaty between India and
Mauritius.

"The Centre is alive and conscious of the potentiality
of misuse of double taxation treaty between India and
Mauritius. In fact, further amendments to the treaty are being
negotiated," the affidavit said.

The Department of Revenue brushed aside the allegation
of inaction relating to stashing of black money in foreign
banks by Pune-based businessman Hasan Ali Khan against whom
Enforcement Directorate has lodged a complaint for violating
Foreign Exchange Management Act (FEMA).

It termed as baseless the allegation that the Centre
was interested in protecting powerful individuals who may have
been using Khan and his wife as their nominee/benamidar.

The Centre said action has been undertaken against
Khan by the Enforcement Directorate (ED) in which his passport
was revoked in 2007 and an FIR was registered agaisnt him in
2008.

The Apex Court had issued a notice to the ED and
sought its response to a complaint lodged against Khan for
accummulating wealth to the tune of over eight billion US
dollars in foreign banks.

During the last hearing on July 20, senior advocate
Anil Divan, appearing for the petitioners, had alleged the
government did not inform about the complaint lodged by ED in
December 2008 against Hasan when it had filed the affidavit on
May 2.

It was pointed out the complaint filed on December 22,
2008, by an Assistant Director of ED against Khan, showed on
December 8, 2006, Khan had an amount of over USD 8 billion in
his account with UBS AG, Zurich.

This amount, Divan had said, was equivalent to Rs
36,000 crore.

In a written submission in response to the first
affidavit filed by the Centre, the petitioners had said
vigorous investigations could have been undertaken into this
aspect and action should have been taken against Khan on money
laundering charges.

In the complaint, ED had also made a reference to
Khan's account and money deposited in UBS Singapore.

Besides Jethmalani, five others, including former
Punjab DGP K P S Gill and former Secretary General of Lok
Sabha (Lower House of Indian Parliament) Subhash Kashyap who
are petitioners, have alleged government was not taking action
to bring back black money stashed in foreign banks.

The affidavit filed by the government has not dealt
with the facts that there was a fake passport case against
Khan and investigations into alleged money laundering were
also being undertaken against him and he was involved in
transactions with Saudi Arabian arms dealer Adnan Khashoggi,
they had said.

Pointing out various alleged inactions against Khan,
the petitioners in written submissions said "is it not
unreasonable to infer that the government is interested in
protecting powerful individuals who may be using Khan and his
wife as their nominee/benamidar".

Further, Diwan had said, "the most important factor is
that not even a single individual has been apprehended or
interrogated by the government in last five years in relation
to money laundering and slush funds parked abroad."

The affidavit had said investigations against Khan and
his alleged co-conspirator Kashinath Tapuria relating to
suspected illegal deposits made by them in UBS Bank were
underway.

The petition has cited the alleged instance of ED
detecting deposits made of around 8.04 billion dollars with
the UBS Bank in Zurich by Khan during a raid in Pune in
January 2007.

The Income Tax Department had also served a demand
notice to the tune of Rs 20,580 crore on Khan, besides Rs
40,000 crore on Tapuria and his wife Chandrika, the petition
claimed. PTI RKS
SDE
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