Primer: How to transport $130 billion

The WTF News of the day:

Two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false bottom that was searched by the Italian authorities June 3 when they were in Chiasso, at the border with Switzerland, about 50 kilometers north of Milan. 

Wow! They were caught transporting $134 billion ... not 134 billion yen - which would still be a mind boggling $1.37 billion! Would they have been caught if they were using the Gulfstream IV or Gulfstream V? instead of a car? 

Folks, $135 billion is so much money that it will wipe most of India's External debt ($140 billion). Only 29 countries in the world have more external debt than the amount captured in the raid. Also, i am wondering if this amount is legal or black money. Does it belong to any bank or does it belong to some mafia gang? Why am i thinking that this news will suddenly die down & we will never hear more about this incident?

Another aspect of the news that surprised me - Italian Financial Police. Do these folks go around Financial institutes dressed in coats & ties? I bet India can do well with one such special force dedicated to fight black money? Mr. Pranab Mukherjee, i hope you are listening.

My vote is for sale - Part 2

It was quite a coincidence that i wrote a blog & the BJP manifesto (asking for "Swiss black money" to be returned) was released. Let's see if there is any other political party that answers the questions in this blog.

Issue #2: My vote is for the party that will flight "shadow black money system". 

Chidambaram came up with a fantastic idea in 1997 - VDIS'97 - Voluntary Disclosure of Income Scheme where unaccounted income could be disclosed & with tax paid on the same, the money would be regularized. If my memory doesn't fail - there was huge publicity and the ads were displayed on TV during Sharjah series cricket matches as well. The end result - the government netted Rs. 10,000 crores on "black assets" of 33,000 crores. The highest  payment came from Andhra Pradesh when a gentleman declared black assets of 500+ crores and paid 170 crores. Phew!

I think the time for VDIS II has come. With the real estate boom & the criminalization of politics, it is time for the government to remove black money from the system - estimated at 18 to 20% of GDP ($210 to 234 billion). Thus, putting together the offshore loot & local black money - it's an astounding $1.5 trillion! And to see no politican speak of it ...

.. isn't a surprise. Most politicans are the beneficieries of this ill-gotten wealth. Let me take one example of a recent addition to the political environment. Actor Chiranjeevi -my favorite Telugu actor & the star of Andhra Pradesh. 

Chiranjeevi filed his nomination papers for Tirupati MLA seat on 4th April 2009. As part of his papers, he declared assets worth Rs. 88 crores in the name of his wife & himself. No information on assets belonging to his children were released. That seems normal for a film icon whose 30 years in film world has produced more hits than one can count. However, one particular detail caught my attention. Chiranjeevi declared owning a site in Mount Road, Chennai  measuring 4,092 sq. yards (36,828 sq feet or 15.345 "grounds" @ ground = 2400 sq ft) worth Rs. 2.046 crores.

The calculation works to Rs 13.33 lakhs per ground for the property! That's a joke. We don't get property for Rs. 13 lakhs, 50 kms outside Chennai forget at the heart of the city. The actual value of the site is worth at least 25 to 50 times the declared rate at the least (Rs. 50 to 75 crores). Assuming the same kind of under-declaration, Chiranjeevi & his wife would be worth at least 300 to 400 crores if not more. And Chiranjeevi is contesting as a champion of middle-class! What travesty!

I am not singling out my movie-idol Chiranjeevi, but this is the trend amongst all politicians in India. 

The single largest source of black money in India is in these land-holdings. Let me explain how black money is created & funded. Assume Chiranjeevi wants to sell the land. The government guideline value might be Rs. 4 crores for the 4092 sq. yd land (i have no info on the guideline value in Mount Road). The seller buys stamp paper (11% of sale value - Rs. 44 lakhs) for Rs. 4 crores but the actual sale price might be Rs. 40 crores (assumption). In this case, Rs. 36 crores of black money is either created or routed. The government is also a loser - instead of receiving Rs. 4.4 crores as stamp duty, it receives Rs. 40 lakhs. The modus operandi of Indian politician at it's shameful worst!

My Vote is for sale - Part 1

I see nothing wrong in putting my vote for sale. In fact, i am thinking of writing an entire series of demands to the person seeking my vote.

The party that goes after money stolen in India and deposited outside gets my vote. So, here is what i want my party to do.

Step 1: Prepare a list of all countries that act as tax havens and publish it publically.

Step 2: Call the envoys/ambassadors of these nations for a meeting and give them an ultimatum. They have 3 months to produce a list of account holders and the amount stored in the banks in their countries.

Step 3: If the countries refuse, we ban these countries - economically & politically. All companies HQed in these tax havens will be refused license to operate in India. Citizens from these countries won't be allowed to travel to India and vice-versa. A complete black-out.

It is rumored that 700,00,00,00,00,000 (70 lakh crores!) - a full 162% of India's GDP of 43 lakh crores - is boarded outside India. Time to bring back the money.