Here are 10 questions the Modi government needs to answer on black money.

1. Did the prime minister make a wild guess or did he state a fact?
“No one dares to send money abroad now,” said Prime Minister Narendra Modi in his Independence Day speech. This is a sweeping statement. But he hasn’t told us how he reached this conclusion.

Illicit offshore transactions are insidious. They are next to impossible to detect. Only occasional leaks give an idea of the scale of what’s happening in total opacity. So if we can’t see money going abroad, it doesn’t mean it’s not going anywhere. And if we can’t trace it, it’s probably because we’re failing. This is the war most countries around the world are losing right now. Has India won it?

If the prime minister meant the recent anti-black money legislation and probes have had a deterrent effect (highly debatable, given the various shortcomings and failures), then he should not have stated it as a fact but as a wild guess. Such claims need to be backed with more proof.

If citizens start believing everything that needs to be done has already been done, they will lower their guard. Surely that’s not what Modi would like us to do?

The global army of hardcore cheats are armed with massive wealth, an army of experts, lobbies and laws that protect them. They will not give up on India so easily. After all, it’s a country where the number of millionaires is set to rise by 65% in the next five years, as per the recent Credit Suisse wealth report.

2. What lesson did the government learn from the failure of the compliance window scheme?
In August, Modi announced that Rs 6,500 crore was coming in while he was speaking of the supposed success of the compliance window that was ending in September. But later the revenue secretary said that disclosures under the compliance window were only Rs 4,147 crores (638 disclosures). When people started wondering what happened to the Rs. 6,500 crore figure, Finance Minister Arun Jaitely said this was the recovery from the HSBC probe, not from the compliance window. Figures are being brandished in a confusing and misleading way.

Anyway, we now know that the figure Rs 6,500 crore has nothing to do with the compliance window disclosures. The Rs 4,147 crore from the disclosures will actually give a yield of an unimpressive Rs 2,488 crore.

The compliance window threats could have worked if the guilty feared that the government could nab them if they didn’t disclose their accounts. But the failure of the scheme teaches an important lesson. It shows that tax evaders and criminals sending money offshore feel safe and are not afraid of the government’s multiple treaties, laws or investigations. Clearly, these are ineffective.

3. What is happening to the HSBC probe?
India recently got additional information on the HSBC probe from France. Whistleblower Hervé Falciani, who first pointed out that there was more data to be had for India, is now saying there’s yet more to be done. He says he needs support from Indian judges to help India’s black money probes further.

Sources in the tax department said India asked France for some missing elements. But we were not told whether or not this additional information received has led to more names being added to the actionable cases on the HSBC list. It seems it did help India push Switzerland to make the bank hand over information, after which some names were published in its official gazette.

But did India seek information only for the cases already under investigation from the original 2011 list or did it expand its probe? Swiss Leaks had revealed 1,195 names (Rs 25,420 crore). Is the government list still stuck at the original 628?

HSBC premises in Mumbai were raided in February but reportedly no incriminating evidence was found. Is the HSBC data not incriminating evidence enough? After all, it has led to money being recovered, proving therefore that Indians had illicit accounts in the bank. France, Belgium and Argentina have slapped criminal charges on the bank. France ordered the bank to pay $1.1 billion as bail. The bank has also been fined in the US ($1.9 billion) and in Switzerland ($43 million).

4. Why is the government discouraging whistle-blowing in India?
If the only substantial chunk of black money the government can boast about recovering today is from probes related to HSBC Bank, Geneva, and LGT bank, Liechtenstein (Rs 6,500 crore or $1 billion in accounts), then this shows it’s only leaked data that has led to any effective action in the case of offshore black money.

So if insider information has been the most effective way to “get back black money”, why is the government not rallying for whistle-blower protection laws both on the international and home fronts? Why have they done exactly the opposite in India by bringing in amendments that render whistle-blower protection laws toothless?

A simple law protecting insiders reporting corruption can turn the whole game around. Yet the government prefers to brandish laws, treaties, vows, warnings every other day and none of this ever leads to anything concrete.

5. Will national bank scams lead to anything?
The two new cases that have emerged (Bank of Baroda and Oriental Bank) show how a number of local banks are involved in offshore money laundering where banks such as HSBC are used as hubs. But how will these investigations eventually end? Probably with the banks getting away with small fines that don’t make a big dent in their profits. Recently, several Indian banks were fined Rs 50 lakh and Rs 3 crore by the Reserve Bank of India for violating customer identification and anti-money laundering norms. Is that enough to dissuade these banks from sending thousands of crores to offshore banks?

6. Will the government outlaw election funding from corporations?
The large-scale tax evasion that really harms national economies is carried out by big businesses. Those in power are often complicit with the corporate world. If this is not the case in India, the government will have to show something for it. A good starting point would be cutting down corporate election funding. The Bharatiya Janata Party spent Rs 700 crore in the last general elections. The government could lead by example and make the BJP’s election funding transparent. Or India could do what Brazil recently did. Its apex court banned money donations from corporations for election campaigning.

7. Why is the automatic information exchange system being held up like a trophy?
The automatic information system developed by the Organisation of Economic Cooperation and Development is not going to end banking secrecy. Experts have pointed out that it’s full of loopholes. The finance minister keeps repeating that this will lead to the end of banking secrecy. It will not.

Also, the previous government was already engaged with this OECD project from its initial stages. This government has only followed in its footsteps.

The same holds for bilateral treaties. The BJP had said (before it came to power) that the double taxation avoidance treaty with Switzerland is an “impotent instrument”. That could well be true of some of the new treaties being signed now, otherwise the government would have been able to announce big recoveries.

As for the number of bilateral treaties, scores were already signed by the previous government. Why must we consider treaties as achievements now anymore than we did earlier, given that there’s nothing to show they’re getting back black money?

8. Why can’t India be as proactive as Argentina?
The Argentinian authorities have indicted HSBC, asked for $3.5 billion to be repatriated to the country, and officially taken the HSBC whistleblower on board to train 50 of their investigators on how to tackle the offshore problem. Argentina’s chief investigator Ricardo Echagaray of the AFIP (Administración Federal de Ingresos Públicos) has the mandate to speak to the press on probes into offshore tax evasion. Their public briefings are more transparent and also work as a deterrent factor.

In India, only the finance minister and the prime minister really have the mandate to make important statements regarding offshore investigations. There is reluctance to inform the media across all departments dealing with black money investigations.

Argentina’s chief investigator Echagaray told me in Paris that his country would be willing to cooperate with India to fight against tax evasion under an accord signed four years ago.

Has India tried to reach out to other countries to expand its HSBC probe?

9. Why is the finance minister saying there is more black money at home than abroad?After all the aggressive pre-election posturing from the BJP on offshore accounts, we are suddenly hearing they are not that important anymore. The recent Bank of Baroda and Oriental Bank cases show us that this is the wrong approach to take. There are a number of local banks involved in sending money abroad to hubs like HSBC. Round tripping, participatory notes and other kinds of dubious offshore instruments and transactions are huge problems for India. Besides, it’s hardly constructive to pit one kind of black money against another.

10. Are offshore industry experts outsmarting Indian investigators?
The resources and expertise available to the offshore industry are massive. Indian investigators will have to give up the traditional approach if they are to tackle the problem. The offshore problem cannot be fought without meaningful collaborations that go beyond weak treaties.

Some cases just slip out of investigators’ hands. The UBS-Hasan Ali case remains one of the biggest unsolved black money cases today. UBS, which is the world’s leading financial institution, is being actively pursued in countries like the US, Germany, Netherlands and France. But in India there has been no visible effort to take the probe further.

The American whistleblower Bradley Birkenfeld who was rewarded $104 million by the US for his revelations on UBS, said he was willing to help Indian investigators. Another UBS insider Stephanie Gibaud also offered help.

But Indian investigators are not taking these insiders seriously when they say it is important to first figure out the modus operandi of the offshore banks and then keep evolving with the methods of the illicit industry. Shouldn’t all help be more than welcome?