As civil society has become more vocal on the issues related to corruption and scams, India has fulfilled its long-sought commitment to combating corruption by ratifying the United Nations Convention on Corruption in May this year. So far, 140 countries have ratified the treaty.

When civil society erupted into protest over the need for effective laws in India to stem corruption, they were posing the vital question at that time: why, after India had been a non-permanent member in the United Nations for a term of two years, and eyeing permanent membership, had it not ratified the United Nations Convention on Corruption, which it had signed in 2005? Then the Indian government response was to cite the tough legislative procedures required to enact such laws, or to form committees which will draft such legislature. Now the big question is: will India effectively amend its municipal laws and its administrative and legislative structure to stop such corruption? 

Manmohan Singh is leading the most corrupt government India has ever witnessed. The fight against corruption has increasingly gained traction in the recent months. Pajhwok Afghan News/ Demotix: All rights reserved 

There is a great deal that could be done, if India truly wants to control the gravy train and the illegal flow of swindled money, deposited in tax-free havens. The Indian state could for example, use the convention as a launch pad for bringing illegal money deposited outside India, back home.

It is to be noted that Article 4 of the UN convention envisages that member states shall carry out its stated objectives in their respective jurisdictions, in a manner consistent with the principles of sovereignty. If one reads this carefully then the convention does not permit one nation-state to interfere with the municipal laws or breach the territorial sovereignty of other nations. In other words, it requires mutual co-operation among member-states to enact anti-corruption laws, in order to tap into the wealth which is illegally deposited outside the country’s sovereign border. If India seriously considered arresting the flow of black money, then it needs to make laws and formulate policies which will enable it to have mutual co-operation through effective bi-lateral treaties with other countries in its campaign against corruption. This in many ways should be part of its foreign policy objective. 

Although India has ratified the treaty as an extension of its lofty ideas, there is a lot to be done within the municipal laws. The UN Convention on Corruption recommends effective municipal laws with adequate safeguard measures to promote effective transparency and stop money-laundering. India has taken a first step by passing the landmark legislation called the Lokpal bill on 27 August 2011. Along with this, it has to ensure that government institutions such as the Central Vigilance Committee, Central Bureau of Investigation and the Central Information Commission are fine-tuned to act according to the changed municipal law. Further, if India is seriously committed to the International treaties it needs to expand its transparency on the wealth of political parties and funding for election campaigns.

More importantly, how is India going to monitor and control the parallel economy, which is estimated to be worth USD 1.3 to 1.5 trillion, perched in offshore bank accounts? The Supreme Court has repeatedly pressed the government over this issue. One way of looking at the problem is through an amnesty as practised in the United States of America. The Internal Revenue Service (IRS) has unveiled a program entitled the ‘2011 Offshore Voluntary Disclosure Initiative’, which is aimed at making US citizens reveal undisclosed foreign accounts. This in a way forces the reluctant taxpayer to show their past taxes and so remit, in order to avoid civil and criminal procedures against them by the states. Can this be extended to India? 

It is to be noted that India has witnessed many amnesty schemes making voluntary disclosures the way to avoid criminal prosecution. However, all these amnesty schemes have failed in the past. One that came close to success was the scheme proposed in 1997 providing immunity from both the Foreign Exchange and Company law and income tax laws prevailing in India. On the other hand, this scheme was criticized by the Supreme Court for nullifying the honesty of prompt taxpayers. 

Will India put forward legislation for amnesty again or is there any other strategy to achieve the same goals? The Finance Act enacted this year has vaguely talked about having provisions for information about cross- border transactions; but it has dodged the question whether the Ministry of Finance might notify those countries which don’t co-operate with India on Indians having their money abroad, or whether the Act will push for a scenario where treaties with countries requiring the exchange of exact tax information will be a priority. 

Civil society needs to keep up the pressure of scrutiny on the Government to see if India is really committed to stopping corruption and having accountability and transparency in its state apparatus. The ratification of the UN treaty and the Lokpal bill were important steps. The next steps will now have to be closely watched.