‘Follow the money’



From the order of the same two judges, July 4, appointing a Special Investigation Team to probe the stashing of money in foreign banks

Money trail

“Follow the money” was the short and simple advice given by the secret informant within the American government to Bob Woodward, journalist with The Washington Post, in aid of his investigations of the Watergate break-in. As a medium of exchange, money is vital. However, increasing monetisation of most social transactions has been viewed as potentially problematic for the social order… The scrutiny and control of activities by the state in the public interest, as posited by modern constitutionalism, is substantially effected by the state “following the money.” In modern societies very little gets accomplished without transfer of money.


Large amounts of unaccounted monies, stashed away in banks located in jurisdictions that thrive on strong privacy laws protecting bearers of those accounts (from) scrutiny, raise worries. First and foremost, such large monies, stashed abroad and unaccounted, would suggest the necessity of suspecting that they have been generated in activities deemed unlawful. In addition, it would also lead to a natural suspicion that they have been transferred out of the country in order to evade payment of taxes, thereby depleting the capacity of the nation to undertake many tasks that are in public interest.

 Soft state

The quantum of such monies may be rough indicators of the weakness of the state, in terms of crime prevention and tax collection. The softer the state, the greater the likelihood that there is a nexus between the lawmaker, the lawkeeper, and the lawbreaker.

With globalisation, nation states are also confronted by the dark worlds of international arms dealers, drug peddlers, and various kinds of criminal networks, including networks of terror. They work in the interstices of the microstructures of financial transfers across the globe, and thrive in the lacunae, the gaps in law and of effort.

Increasingly, on account of a “greed is good” culture promoted by neoliberal ideologues, many countries face the situation where the model of capitalism that the state is compelled to institute, and the markets it spawns, are predatory in nature. The paradigm of governance that has emerged over the past three decades prioritises the market over any degree of control of it by the state. The role for the state is visualised by votaries of the neoliberal paradigm as that of a night-watchman…

 Slow probe

The amount of unaccounted monies, as alleged by the Government of India itself, is massive. The showcause notices were issued a substantial length of time ago. The named individuals were very much present in the country. Yet, for unknown, and possibly unknowable though easily surmisable, reasons, investigations proceeded at a laggardly pace. Even the named individuals had not yet been questioned with any seriousness.

The real point of controversy is as to whether there is a need to constitute a Special Investigation Team to be headed by a judge or two of this court to supervise the investigation. It was submitted to us that the Union of India has recently formed a High Level Committee under the aegis of the Department of Revenue in the Ministry of Finance… While it would appear, from the status reports submitted to this court, that the Enforcement Directorate has moved in some small measure, the actual facts are not comforting… In fact we are not convinced that the situation has changed to the extent that it ought to so as to accept that the investigation would now be conducted with the degree of seriousness that is warranted.

The fact remains that the Union of India has struggled in conducting a proper investigation into the affairs of Hassan Ali Khan and the Tapurias. While some individuals have been interrogated, many more are yet to be investigated. The formation of the HLC was a necessary step, and may even be characterised as a welcome step. Nevertheless, it is an insufficient step.

 We order:

(i) That the High Level Committee constituted by the Union of India be appointed with immediate effect as a Special Investigation Team;

(ii) That the SIT also include director, R&AW;

(iii) That it be headed by and include the following former judges of this court: Justice B P Jeevan Reddy as chairman and Justice M B Shah as vice-chairman…


Apparently, a former employee of a bank or banks in Liechtenstein secured the names of some 1,400 account holders, along with the particulars, and offered the information to various entities. The same was secured by Germany, which in turn offered the information regarding nationals and citizens of other countries to such countries. It is the contention of the petitioners that even though the Union of India was informed about the presence of the names of a large number of Indian citizens, it never made a serious attempt to secure such information and proceed to investigate such individuals.

We need to examine the claims of the Union of India as to whether it is proscribed by the double taxation agreement with Germany from disclosing such information. Further, we would also have to examine whether the Union of India can claim exemption from providing such information to the petitioners… We have perused the agreement with Germany. We are convinced that the agreement, by itself, does not proscribe the disclosure of the relevant documents and details…

The state has the duty, generally, to reveal all the facts and information in its possession to the court, and also provide the same to the petitioners.

One major constitutional issue and concern remains. The revelation of details of bank acounts of individuals, without establishment of prima facie grounds to accuse them of wrongdoing, would be a violation of their rights to privacy. Only after the state has been able to arrive at a prima facie conclusion of wrongdoing, would the rights of others in the nation to be informed enter the picture.

 We order that:

(i) The Union of India disclose to the petitioners all documents and information they have secured from Germany, in connection with the matters discussed above, subject to the conditions in (ii) below;

(ii) That the Union of India is exempted from revealing the names of those individuals… in respect of whom investigations are still in progress and no information or evidence of wrongdoing is yet available…

(iii) That the names of those individuals, in respect of whom investigations have been concluded and proceedings initiated, may be disclosed;

(iv) That the SIT constituted by this court shall take over the matter.




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