Hasan ali has as much as eight billion dollars stashed away abroad, he is only

one of the big tax offenders and this stash is only a part of the
huge illicit outflow from India.

Documents seized by ED reveal that Hasan Ali transferred $700,000

from Sarasin Bank, Switzerland to the account of S K Financial
services UK maintained with Barclays Bank, London through Citibank,
N.Y.

Hard on the trail of the wealth being stealthily siphoned out of

India, *Headlines Today* went to Switzerland and Liechtenstein to dig
out the little secrets that hide the big secret of Indian black
money.

Gian Trepp, Swiss financial journalist and author, says, "I think in
general if the people, who got rich in India the last 5, 10 years,
want to evade taxes there, now they have opportunities in the world
and Switzerland is certainly one of the big places to go for them."

Indian black money is sometimes physically transferred abroad. The

CEO of a Mumbai-based equity firm recently told journalists that the
money is flown abroad in "special flights" out of Mumbai and Delhi
airports to Zurich. Indeed Indians would be the largest depositors of
illegal money in Swiss banks, according to sources in the banking
industry.

Interestingly, there are no official figures confirming this. The

Swiss Bankers Association told *Headlines Today* over the phone that
such figures simply don't exist, but of course the black money is
very much there and safe.

India is ranked 6th on the black money top ten countdown for illicit
outflows monitored during 2002-2006. The estimated average amount
stashed away annually from India during 2002-2006 is $27.3 billion US
dollars.

Switzerland is the top destination for illegal funds because of its

strict secrecy laws. Also, Swiss banks sell additional masks to hide
the identity of their rich clients, like trusts in the Cayman
islands, shell companies in Panama, or foundations in Liechtenstein,
all run by nominees.

Hasan Ali Khan

Hasan Ali Khan or Syed Mohammed Hassan Ali Khan[1] is a 56-year-old alleged money-launderer[2] based in India
and allegedly worth USD 9 billion or more according to police-authorities. This figure has been verified from a
letter written by UBS (Zurich) to Khan. The Government of India has also confirmed the existence of this account in
UBS, and ordered him to pay Rs 50,000 crore (USD 10 billion) in taxes on that wealth. However, according to
Khan, he is a scrap dealer with an annual income of Rs 30 lakh (USD 60,000).[3] Some sources claim that he might
be the fourth richest person in India and amongst the world's dollar billionaires.[4] However, he is not officially
recognized as a billionaire by any publication because most of his money is in the form of unaccounted wealth or
black money. This can be considered true because India tops the list for black money in the entire world with almost
US$1456 billion in Swiss banks (USD 1.4 trillion approximately) in the form of black money.[5] According to the
data provided by the Swiss Banking Association Report (2006), India has more black money than the rest of the
world combined. Indian Swiss bank account assets are worth 13 times the country’s national debt.

In Swiss bank accounts, the account holder need not even give his or her name. Perhaps that explains why Hasan Ali
Khan's name does not figure in any UBS accounts. Also, the account holder's name need not even appear in any of
the official documents of the account.[9] The Enforcement Directorate, Income Tax department along with the
Economic Offences Wing (EOW) of Maharashtra are probing the illegal investments and charges of money
laundering against Khan.[10] The Supreme Court of India (SC) questioned the Central Government’s inertia on this
issue. “What the hell is going on in this country?” the bench of justices asked as it heard a PIL filed over this issue.
[11]
Expressing its disappointment, the bench remarked: "There are instances when minor offenders are shot down for
violating Section 144 CrPC, but you don't take any action against these people. We are very sorry. All these people
are now free.[12] What is in the way of taking action against Hasan Ali? How many years will investigations continue
against Ali?” The Income Tax tribunal also reportedly asked Ali to reply to their notice within 15 days. Ali
reportedly has not paid his tax evasion penalty worth Rs 40,000 crore. [13]

Introduction

Disclosing the list of defaulters in the Rajya Sabha on 4 August 2009, the Minister of State for Finance S S
Palanimanickam said in a written reply that Hassan Ali Khan tops the list of tax defaulters in India with an
outstanding tax arrear of more than Rs 50,000 crore (USD 10 billion).[14] Former Union Minister and BJP MP Arun
Shourie said that Ali Khan has been known to be connected to underworld don Dawood Ibrahim, known to have
been channeling very large amounts from unknown sources into the Indian stock market, and had 8 to 9 billion
dollars in the UBS and other banks of Switzerland, and has been responsible for hawala transactions (money
laundering) of over Rs. 35,000 crore (USD 7 billion) through Swiss banks.[15] When asked if Hassan Ali is likely to
be arrested, India Today editor Prabhu Chawla said that he doesn't "have much hope" citing that getting Swiss banks
to disclose details is not easy as India hasn't signed a treaty with the Swiss government and also due to Indian
government's attitude.[16]

In January 2011, news reports stated that, "Swiss banks will hold back information on cash allegedly stashed there
by Pune-based Hasan Ali Khan on a technical ground. Swiss authorities’ refusal to part with the information is on
the premise that the offence allegedly committed in India—in this case of not filing tax returns—is not an offence
under Swiss law."[17] Folco Galli, information chief of the Swiss department of justice and police, claimed that the
Indian government had submitted "forged" documents to seek assistance in the Hasan Ali Khan case. [18] Finance
minister Pranab Mukherjee said investigators had information on three Swiss bank accounts being allegedly held by
Hasan Khan, but no money was left in them. In one, $ 60,000 was deposited but withdrawn within a day and no
trace was left.[19][20][21]

Hassan, the 56-year-old Indian tax evader, is said have had 1.5M Dollars - over 5 crore rupees at the Dollar-Rupee
exchange rate of the year- in his bank accounts in the year 1982. In the year 1982, he was only about 28 years old.
Neither Enforcement Directorate nor CBI has any idea how did he get so much money initially.[22]

Biography

Till the late 90s, Hasan Ali, along with his wife Mehbooba Khan and two sons, lived in Banjara Hills - one of the
most expensive addresses in Hyderabad. Here, between 1990 and 1993, he was accused in six cheating cases that
earned him the title of Hasan (literal translation is Thief Hasan). By 2000, he had moved to Pune and was known
mostly in racing circles as Hyderabad ka Ghodawala, a middle-rung horse breeder. [23]

Hailing from a Hyderabadi family based at Musheerabad, Hasan Ali has a brother and four sisters. [24] Born in 1953
and brought up in Hyderabad, Khan lived with his wife Mahbooba Khan in the posh Banjara Hills before he
divorced her and shifted to Pune 10 years ago after marrying his present wife Rheema, sister of a horse-trainer,
Faisal Abbas. The couple have a six-year-old son. Better known in the racing circles as H.A. Khan, he owns 10
horses, besides two floors in the swanky Tulip Apartments of Valentina Society in Pune's Koregaon Park and a flat
in Anand Darshan building in the upmarket Peddar Road in Mumbai. He also owns two Mercedes and a Porsche. [25]

Come horse-racing season, and Khan would shuttle between Pune and Mumbai. A pastime associated with the rich
and famous, horse-racing was Khan's obsession as well, though he was not inclined to hobnob with the glitterati of
the race course. A rather quaint figure, he could be seen occupying the last corner seats with wife Rheema. Even his
horses gave the spotlight a miss, garnering only a few second-rung trophies. Khan's routine at the race course was
without deviation. Fitted out in his trademark Safari suit, he would reach sharp at 11 am and leave by 3 pm. For
someone who the i-t Department claims enjoyed an extravagant lifestyle, Khan wasn't even famous within the racing
circles. "Of our members, he kept the most low profile, preferring not to interact with anyone," says Vivek Jain,
committee member of the Royal Western India Turf Club (RWITC) at Mumbai. Low-key in life, he displayed a
modest taste when acquiring thoroughbreds, opting for the comparatively cheap grade four variety priced between
Rs 15,000 and Rs 1 lakh. He did not own any stud farm, instead preferring to pay maintenance charges of Rs 15,000
per horse to the RWITC and the Pune Turf Club. Jain finds it incredible that he could have made money through
betting. If not betting, then what? That's the question dogging the I-T Department. [25]

Swiss connections of the horse-owner came to light during raids at his Pune and Mumbai residences between
January 5 and 7 by the Income Tax (I-T) Department and the Enforcement Directorate (ED). A laptop seized from
the Mumbai address, together with Rs 85 lakh in cash, sent the 53-year-old Khan scurrying to Pune's Jehangir
Hospital with severe chest pain. Not surprising, considering the laptop contained a list of 10 Swiss Bank accounts
reportedly stashed with over Rs 20,000 crore-all of it unaccounted for. According to I-T sources, the money came
from hawala transactions Khan conducted for politicians and businessmen. "He was a hawala operator who shipped
funds abroad to countries like Mauritius and Madagascar and then re-routed the money to India through bogus
companies in order to evade tax," an official said, requesting anonymity. Links with terrorists and the underworld
are also not being ruled out. The cash, it is suspected, was being parked by Arabs who, after the 9/11 World Trade
Center bombings, were finding it difficult to invest with European and UK banks.[25]

Personal life

Hailing from a Hyderabadi family based at Musheerabad, Hassan Ali has a brother and four sisters. His father was
an excise-officer. He married Mahboobunnissa Begum and divorced her in 1999. He got his elder daughter married
off in a good Muslim family in Banjara Hills. From his humble parental abode at Mushirabad, he moved to
Shahjahan Apartments in Khairatabad. He ran a successful car rental agency in Shahjahan Apartments. He came in
touch with Mr. S. A. Alam, manager of State Bank of India, Charminar Branch, Hyderabad and with the help of his
joint accomplices - P.R.Khan and Azad Khan, in the disguise of his export business cheated the bank out of millions
of rupees. Mr. Alam lost his job as a result but could not do anything. Later, Hasan moved to the posh Banjara Hills
area and acquired properties during the economic boom. His second wife Reema belongs to the famous 'Poonavala'
family.

Small beginnings to commanding heights

Khan has an unsavoury past. This is going by his record in Hyderabad, where he lived till the mid-nineties. There
are two sparingly varying accounts:

 According to Khan’s account to investigating agencies, his father was an excise officer in Hyderabad,
where Khan studied till Class 12, and went on to sell antiques, claiming to be a descendant of the Nizam’s
family. He then started a car rental service in 1970, before switching, in 1988, to a metal trading business
in Dubai. Khan said this business, called Great Ventures, closed down in 1993. Meanwhile, Khan entered
the world of horse racing in Hyderabad in 1991 with only two horses. Then in 1994, he began racing at
Mumbai’s Mahalaxmi racecourse, where he also was a punter. Soon, he expanded his horse racing
activities to Pune, Bangalore, Chennai and Delhi. Police say his horses even began racing in Switzerland
and London. Khan has reportedly won four races and was also a member of the Royal Western India Turf
 Club (RWITC), Pune. According to Imtiaz Sait, a trainer at the RWITC, Khan used to sit alone in a corner of
the members’ enclosure at the racecourse. “None of us knew him well. He kept to himself,” Sait said.
Many of his other ventures were failures. After closing down the car rental and then a scrap business,
Khan started a jewellery shop in Kuwait in partnership with a man called Hussain from Jammu and
Kashmir in 2006-07. Pune Police say they interrogated Khan in March 2007 soon after his name appeared
in the media for his alleged involvement in the multi-crore hawala racket. [26]

 According to other people’s account to investigating agencies, as his family had fallen on bad times in the
1970s, he started out as a tuitions teacher but subsequently started cheating people and banks. He was
also a suspect in a case of throwing acid on a doctor in the city and in a hawala racket case. From being a
trickster, he graduated to be a cheat and then a bank scamster. From there he became a hawala operator
and ultimately an international money laundering racketeer, people who have known him in Hyderabad
told TOI. People who know him from the 70s said his family had fallen on bad times and he had begun
giving tuitions.[1]

From a humble beginning as a punter at the Mahalaxmi race course in Mumbai, Khan soon became a horse owner
and was even involved in several failed ventures: a travel agency, a car-wash plant that never took off, a metal
trading company named Great Ventures that went bankrupt and a business in selling artefacts. When trading in
artefacts, he would claim to be a descendent of the royal Nizams and try to pass off white marble statues from
Makrana of recent origin as antiques. His legally viable ventures would inevitably perish. It was during this time that
Khan came in contact with Kashinath Tapadia, brother of the late Priyamvada Birla of the Birla business house. I-T
sources, who have also questioned Tapadia, claim the duo ran the hawala business as partners and the money was
routed through Tapadia to the beneficiaries. The two also allegedly donned the mantle of invisible investors in
Indian equity markets. Sources say Khan used Participatory notes to invest in the capital and commodity markets.
(Participatory notes can be traded like stocks and sold as notes. These transactions are, at times, untraceable.)
Among his close associates was hotelier Phillip Anandraj, who owns the Korma Sutra in Zurich. Anandraj, who was
interrogated by the ED, is known for his political connections and, say sources, could have been involved in the
hawala racket.[25]

Khan first opened an account with UBS Singapore in 1982 with just $1.5 million and after some time received
$300m in this account allegedly from Khashoggi’s Chase Manhattan bank account in New York. Why this bank-
transfer was made is unknown [27] Khan has been given one month’s time to reply to a show-cause notice to explain
how his funds grew from an initial deposit of $1.5 million in 1982 to a balance of $8 billion by 2006.[26]

Relationship with Adnan Khashoggi

The ED has traced Khan’s alleged transaction with Adnan Khashoggi through a notarized statement of Khan signed
on 29 June 2003 in London. The document contains a letter written by Khan to Prabhu Guptara, director,
Organizational Development, Woflsberg Executive Development Centre, Switzerland (a subsidiary of UBS),
explaining why one of his Swiss accounts had been tagged with the remark: ‘Funds from weapons sales’, and had
been made inoperable. The letter explained the circumstances in which Khan first opened an account with UBS
Singapore in 1982 with $1.5 million, through Retro Hartmann of UBS Singapore and then how allegedly Dr Peter
Weilly, porfolio manager of Khashoggi, virtually took over as his manager. Khan had received $300m in this
account allegedly from Khashoggi’s Chase Manhattan bank account in New York. After the document was
notarized by a UK notary on June 29, 2003, Khan seems to have allegedly reported his Indian passport as lost in
London and acquired a new passport there. A copy of the first page of the old passport is enclosed with the notarised
document. The probe has also thrown up ‘evidence’ against Khan’s associate Kashinath Tapuria, who has said that
two politicians, one of them a senior Congressman, had referred Khan to him during his days of financial
difficulties.[27]

How his bank account swelled

Evidence from a June 2003 document recovered by the agencies, duly notarised by the Notary Public of London[26]
[28]

• Khan had started an account with a deposit of $1.5 million with UBS Singapore in 1982.[27] The recommendation
for opening the specified bank-account was organised by Dr Peter Weilly through arms dealer Adnan Khashoggi,
whose portfolio was handled by Weilly

• A payment of $240 million (allegedly from Adnan Khashoggi's Chase Manhattan Bank account in New York)[29]
was approved by Weilly and accepted by Reto Hartman at UBS Singapore

• After the $240 million transaction, the account moved from UBS Singapore to UBS Zurich in 1986

• By December 1997, the deposit amount reached $560 million. Due to certain problems, Khan could not operate
this account (Swiss authorities froze the account saying that the "Funds were from weapons sale.")[29]

• By 1999, the same account mysteriously increased to $969 million (~ US$ 1 billion). Most of this money is lying
as liquid cash and bonds[29]

• By 2001, a refund of $300 million was deposited as ‘funds from weapon sales’ into the account. A little later, the
account became non-operational.[30]

• As on August 31, 2006, the balance in the account was US$6.6 billion

• Balance as on November 2, 2006: $7.7 billion

• Balance as on December 8, 2006: $8.04 billion

ED’s findings included Khan’s plan to finance a $500 million project of Khashoggi that was contained in a notarized
document signed by him on 29 June 2003 in London. A notarized document is certified by a licensed public officer
who serves as an impartial witness and establishes the authenticity of the signatures. The two transfers of $1.6
billion and $7 million that are said to have come to light recently were carried out in November 2006 through
correspondent banking, an arrangement where one bank makes or receives payments on behalf of another. The
money was transferred from Bank Sarasin to a US branch of Citibank NA, then to Barclays Plc in the UK and
finally deposited in a firm in the UK. ED is now conducting fresh inquiries into the matter. Khan has challenged the
tax authority’s demand for unpaid taxes in the income tax appellate tribunal. The case will come up for hearing on
21 July 2010.[31]

Claims and allegations

] Allegations

Money laundering

Officers in investigating agencies in India claimed that this person could be the latest unknown rich businessman on
the block. He was found to have operated Swiss accounts involving over Rs 1.5 lakh-crore($32 billion). The income
tax department has levied a tax of Rs 71,848($15.6 billion) crore on him for concealing Indian income secreted in
Swiss accounts. His wealth is said to be in the region of anything between USD 8-9 billion or much more, and most
of it unaccounted.[32] He allegedly stashed US$ 8 billion in his Swiss bank accounts (mostly in UBS [33][34]) through
money-laundering. His wife Reema and her brother Faisal Abbas have allegedly helped him hide since 2007. Khan's
lawyer Majid Memon said "his client was not in touch with him" as of 17 August 2008.[35] He was a Pune-resident
and horse trading circles describe him as a smart punter but a small time horse owner. [32]
Along with his partner Kashinath Tapuriah, Ali allegedly opened two fictitious companies Autumn Holdings and
Paysons in the Virgin Islands and laundered money to the tune of US $280 million.[29]

A year after he was raided, the US $8 billion man still roamed free.[29]

The reluctance of these top Swiss banks mentioned above to help Indian investigators is slowing the unravelling of
an intricate multinational trail of money transfers—across Switzerland, New York, the British Virgin Islands and
Pune—between an Indian horse owner and a fugitive Saudi arms dealer, according to officials in the Enforcement
Directorate, the government body that investigates economic crimes. Investigators from the ED, who recently claim
to have found $8 billion in the Swiss bank accounts of Hasan Ali Khan, say they now have evidence of a $300
million transfer to him (via a Chase Manhattan bank account in New York) from billionaire Saudi arms dealer
Adnan Khashoggi, whose arms supplies to Tamil terrorists, the LTTE, were revealed during an investigation into the
1991 assassination of Rajiv Gandhi. The government has told the Bombay high court that the Khans are “virtually
absconding” and if they are allowed to leave India, investigations could collapse. Khan’s counsel, Milind Sathe, said
his client “regularly appeared before the Directorate”. Asked where Khan was, his main lawyer, Mugdha Jadhav,
said: “Can’t tell you, sorry.” [34]

[edit] Others

Police sources in Hyderabad aver that he had also laid hands on some jewellery of the family of Nizams and
siphoned them off. "There is no police complaint on this because much of the Nizam's riches have gone missing
over the years," sources said. The value of the jewellery he pilfered is not known and neither the parties that he sold
them to.[36]

He has 10 cases lodged against him, ranging from cheating to con games to extortion. His career in crime started
with throwing acid on his neighbour in 1984, who is a paediatrician called Dr. P Niranjan Rao of Punjagutta in
Hyderabad. Dr P Niranjan Rao's face was disfigured and he had to undergo 30 surgeries. By the time he got into the
havala business, he was a well known but shady figure.[37] He was also accused of six cheating cases between 1990
and 1992 which got him the title Chor Hasan or Thief Hasan.

His first hawala operation came unstuck. He was tasked to get back into the country the monies of a dead man which
were locked up in a Singapore bank. Though he failed, he came in contact with a bigger operator called Kanti Das
Tapadia (sic).[36]

The Economic Times stated, "An Enforcement Directorate investigation has revealed that Hasan Ali had rather
modest beginnings. He started a car rental service and a travel agency in 1993 which he wound up in 1994.
Subsequently, he started working with his brother-in-law, Hyder Ali Khan , and got embroiled in some petty bank
cheating cases and other criminal cases in Hyderabad. Investigators also discovered that a stud farm in Gongupalli in
Andhra Pradesh, which he allegedly owns was purchased by one Saujad Nawab. The purchase of land for this stud
farm was illegal since the state government had assigned land to landless people, the person said. The government
had sent letters of rogatory, which are formal requests, to the US, Hong Kong, Singapore, the UK and the UAE. A
response received from the US has confirmed that Hasan Ali had transferred $700,000 from Sarasin Bank, Basel,
Switzerland, to SK Financial maintained with Barclays Bank in London."[38]

Adnan Khashoggi transferred US $300 million from his Chase Manhattan Bank account in New York into Hassan
Ali's United Bank of Switzerland account in Zurich. The Swiss authorities froze the account saying that the Funds
were from weapons sale. Ali and his close associate Kashinath Tapuriah then adopted different techniques to try and
make this account operational. The link to Khashoggi adds a new dimension to the investigation into Ali. Khashoggi
is known in India as one of those named in the Jain Commisison of enquiry into the Rajiv Gandhi Assassination and
globally for brokering arms deals between the US and Saudi Arabia. Investigators say that this only convinces them
of Ali's wide range of operations and contacts.[29]can any one believe that a single man handle all these transaction it
is just stupid

Convictions and court-cases

The oldest case against Hasan Ali pertained to an acid attack on a doctor, his neighbour, in 1984. Dr P Niranjan
Rao's face was disfigured and he had to undergo 30 surgeries. Since the police could not trace the records relating to
the case, it is not clear whether Hasan Ali was arrested and acquitted in this case. [24]

Khan was arrested, convicted, but subsequently acquitted in some bank-fraud and similar fraud cases amounting to
Rs. 2 crore (USD 500,000) in the early 1990s.[39] What happened: In 1990, the manager of State Bank of India,
Charminar branch, had lodged a complaint stating that Hasan Ali had fraudulently withdrawn a total of Rs 26 lakh
on three occasions against cheques that later bounced. A similar case was lodged for defrauding the Grindlays Bank.
In September 1991, the central government had announced an amnesty scheme wherein it allowed Indian citizens to
get foreign exchange from outside. Subsequently at least four persons approached Hasan Ali, who promised them
demand drafts in dollars. He had allegedly collected Rs 10.35 lakh from Suresh Mehta, Rs 6.29 lakh from Rajesh
Gupta, Rs 36 lakh from T Ramnath and Rs 18.22 lakh from P Rama Koteswara Rao. He then produced 'international
money orders' and handed over demand drafts to them to encash the dollars. However, the customers found the DDs
to be fake and lodged complaints with the police in 1992. He was subsequently acquitted and a police commissioner
said, "No case is pending against him as all the previous cases were disposed of by the courts."[24]

Khan now faces a whooping Rs 1 L cr fine for acquiring Rs 36000 crores or more in assets.[27][40]

Current enquiry

As of 13 April 2010, a letter rogatory is to be issued by the magistrate’s court in India to the Swiss police, which
will present it to the authorities in Switzerland. The Swiss court will decide whether the request by the Indian
authorities is to be complied with. Ever since the I-T authorities raided his premises in 2007, it has been speculated
that the money allegedly deposited by Mr Khan in Swiss Banks in fact belonged to politicians and industrialists and
that Khan was only a conduit who facilitated the transfer of the money from India, apparently on a commission
basis.[41]

Switzerland's Federal Office of Justice (FoJ) had last told Indian authorities in August 2010 to complete their
request and the request has not been completed so far.[42] It also stated that the Indian Government had submitted
'forged' documents pertaining to the case of Khan. BJP leader Arun Shourie accused the Manmohan Singh
government of hiding behind a “veneer of respectability” while deliberately suppressing the “fact” of forged
documents being supplied to Swiss banks in the case of Khan.[43]

In the Press conference held by Indian Finance Minister Pranab Mukherjee on 25 January 2011, he revealed that
three accounts held by Khan in Swiss bank are found empty and there is no trace of money worth $8 billion. There
have been speculations[who?] that the money was transferred to Saudi Arabia for arms dealing.[when?]

On 03/03/2011, Supreme court of India has quetioned the Indian governament on why custodial interrogation of
Hasan Ali and other alleged black money launderers had not taken place yet. In the process, the Supreme court has
asked the governament "What is in the way of taking action against Hasan Ali", "How many years will
investigations continue against Ali?". The apex court also ordered forthwith reinstatement of three key ED officials
allegedly transferred midway into the probe in a case of foreign exchange law violation by the Pune businessman
Hasan Ali Khan.[44]
How to recover black money?

The minister said Double Taxation Avoidance Agreement (DTAA) and Exchange of Taxation Information
Agreement are two instrumentalities under which information can be obtained and the government has
already amended pacts with 23 countries to get information from banks. “The early results of our
initiatives are encouraging. These proactive steps led to the additional collection of taxes of Rs. 34,601
crore and detection of additional income of Rs. 48,784 crore on which taxes are being collected,” he said.

“No information can be made available unless there is a legal framework. No sovereign country is going
to share information unless there is a legal framework. But there is a way to get information when Income
Tax authorities decide to prosecute offenders,” he said.

Mukherjee said the multi-disciplinary group looking into the issue would consider all aspects including the
possibility of an amnesty scheme, which would allow one to declare black money, pay tax and escape
punishment. When asked if Mukherjee knew the names of the tax evaders himself, he said: “I have no
intention or authority to know the names of those who stashed money outside which has come to the
government's hand.” The minister said that 77.6% of the (black money) outflows were caused by mis-
pricing. This must be tackled by the directorate of transfer pricing, which is being strengthened.

To drive home the point that it is difficult to get information on black money from foreign entities, he said
Switzerland's UBS had shared data with the US after entering a a private out-of-court settlement, rather
than any government-to-government deal. No prosecution can be pursued on the basis of information
obtained through this channel, he pointed out.

India has amended DTAAs with 23 countries, which will enable us to seek banking information. The
country has started receiving information of Indians who have generated black money outside the country
under DTAAs. These data are being processed. The government’s strategy to deal with the problem is to
amend tax treaties with different countries to seek information on bank details.

According to Mukherjee, a change in international opinion in the wake of the 2008 financial crisis had
played a positive role in amending treaties. The G-20 countries had decided to jointly take on countries or
tax jurisdictions, which were reluctant to share critical information, Mukherjee said.

Last week, the Supreme Court criticised the Union government for its handling of black money deposited
by industrialists and others in foreign bank accounts. Mukherjee held the conference after Prime Minister
Manmohan Singh asked the finance ministry to place in public domain the strategy to deal with black
money.

Mispricing

It is very difficult to understand product pricing in Mumbai. One doctor in a Mumbai suburb recently sold off his
practice – well he actually sold off his shop. It is not a very big shop…and now an ice-cream parlor has been set up
there.

Got chatting….with a couple of friends and found that the rent there is Rs. 88,000 per month. The ice-cream
business is quite competitive and may not have too much of a margin – let us assume that the GROSS margins are
about 20%? Now a shop with a rent of 88k..let us assume other expenses (electricity should be a bomb)will have
total expenses of Rs. 130,000 pm. To earn this he will have to sell icecream worth Rs. 650,000 per month or about
Rs. 26,000 a day. Now assuming each person who comes into the shop consumes Rs. 100 worth of ice-cream about
260 people will have to walk in every day. Looks tough if it has to happen every day.
Now look at this business from a doctor’s point of view. To earn Rs. 130,000 per month + equipment emi+….let us
say he has to gross at the minimum Rs. 200,000 per month. Ignoring taxes is just a matter of convenience- many
doctors do pay Income tax!

To earn Rs. 200,000 a month he has to earn about Rs. 8k a day IN HIS GENERAL PRACTICE -at Rs. 200 per
patient it means he needs 40 patients to break even. Assuming each patient takes 20 minutes…it is 800 minutes a
day to break even. Or it has to be priced better..

Either way both businesses cannot afford this kind of rent…neither does the location deserve it. If these are the rents
in Ghatkopar…Santacruz can only be MORE. So doctors who are already there…can charge whatever they want
and be as incompetent as they want to be – no new comer can threaten them. Simple locational advantage in a mad
booming market where rents have no co-relation to the business that is being conducted there.