The final outcome from the previous tax raids was never disclosed. Several of the doctors raided ‘confided’ to reporters privately that they had to pay large sums to investigating officers for ‘adjustment of the tax-evaded income’. Few knew the real truth. Crime always opens a channel of corruption between the criminal and the corrupt prosecutor for the benefit of both the parties. The tax raids had most likely helped those city doctors obtain the official stamp of approval on the undervalued assets they acquired illegally with black money, which they collect in cash from suffering client-patients, in exchange of small penalties. They were generally happy after the initial ordeal. So were the dozens of investigating IT officers. There was no prosecution, only settlement.

The news of the end-2010 nation-wide tax raid on the premises of the promoters of the Ispat group, alleging tax evasion, fund diversion and money laundering to the tune of some Rs. 8,000 crore, have so far received only a one-time public mention from the department. No one really knows the progress of the case and the money trail, which was alleged to have links with the company’s bankers. The company has since been largely sold to JSW Steel, a Sajjan Jindal group firm, by its promoters and reportedly rechristened as JSW Ispat. The banks are said to be engaged in restructuring the debt of Ispat Industries. Effectively it means the softening or rescheduling of the loan repayment terms and some interest write-off by banks, to save a company and, in the process, ensure that the loans and advances made to the business undertaking do not become the permanent ‘non-performing assets” of those banks.

Were the tax raids at Mittal premises genuine? Or, were they merely used as a conduit by some dishonest taxmen and their higher authorities, including political heavyweights, in connivance with the accused to bail the promoters of Ispat Industries out of the self-designed financial mess? Were those tax raids meant to also regularize the business family’s alleged financial crime with token punishment in taxes and penalties providing the most important official stamp of approval on their present financial status and assets held in India? Such a possibility is difficult to rule out. Tax fraud is rarely treated as a major crime. It is equated with tax evasion. Big-time tax frauds are often given opportunities to come ‘clean’ through negotiated settlements with the taxation authorities. Larger the evasion, the more the concession doled out to the defaulters by the tax department to ensure tax ‘compliance’.

Is the tax department also investigating about how one of the promoters of Ispat Industries managed to turn an NRI with large asset bases in England and at the Isle of Man when his known source of income was came mostly from the sickly Indian steel company. The concerned promoter is probably now a foreign passport holder, which automatically provides some legal immunity against being questioned or harassed by Indian investigators. He could not have amassed such large wealth from poorly performing Ispat Industries built on ordinary shareholders fund and repeated mortgages held with Indian banks to raise large loans.

Why did banks repeatedly advance such large funds to Ispat? Were they satisfied with the company’s balance sheet and the end use of the funds? What were the taxmen doing for all these years? How could they allow the Ispat promoter, a highly politically connected person in New Delhi and Mumbai, to become suddenly a highly wealthy NRI, a status which did not commensurate with his declared income out of the sickly industrial outfit in India? Finally, how did he transfer his wealth? He never ran away from the country. He exited honourably through the front door.

The chances are that the much publicized tax raids involving Bollywood stars Katrina Kaif and Priyanka Chopra would also end in a whimper leading to a ‘small settlement’ helping the large earning filmy heroines cum popular advertising brand endorsers regularize their alleged ‘undisclosed’ income or ‘undervalued’ assets with the official stamp of approval. Incidentally, Katrina, who came to try her luck in Bollywood, came from London. She may still be holding a UK passport. Where did she park her huge Rupee income, in India or abroad? And, little can the government do to her unless her passport is seized without any delay and a serious probe is conducted by the directorate of revenue intelligence about alleged money laundering by Bollywood personalities. Another Bollywood star, Shah Rukh Khan, was recently asked to pay by the tax authorities the gift tax on a high-cost super-luxury property he recently got at Dubai.

Tax-raids at Bollywood are nothing new though their frequency has surely come down over the years despite the increasingly alleged cash transactions reported in the industry and ransoms or protection money raised by the local agents of offshore-based mafia dons. High-cost offshore film shootings have become a regular fare in the industry. Foreign distribution of Indian films is a big business. How much of these proceeds come back to India to pay for the foreign exchange outgo from the Reserve Bank (RBI) on account of the film industry? Nothing happens to the raided stars, who keep twinkling on the screen, and their private financiers. Most of them have deep political and mafia links. Some even got away lightly with the charges of harbouring terrorists and hiding their AK-47s.

With the number of NRIs swelling across the world, the illegal currency swap or hawala has become a big business. Hawala is helping rich resident Indians become NRIs overnight directly or indirectly through children or next of kin. Hawala money is helping them acquire residential accommodation and set up businesses abroad without any hassle. Once they have acquired a residential property and business, they have no problem in securing permanent resident status in a free country. No question is asked about the colour of the money they swapped for the international hard currency. It is not the business community alone which is craving for NRI status. Increasingly, other professionals such as high-earning and cash rich doctors, lawyers, actors, accountants, architects and children of politicians, bureaucrats and taxmen are turning NRIs, converting their huge black income into good assets abroad. And, they are being helped, directly and indirectly, by our tax officials. (IPA Service)