Has the December 31, 2012 raid on the premises of Tamil Nadu trader TM Ramalingam landed in cold storage following an ‘understanding’ between the Government and the alleged true owner of this mindboggling wealth of International Bills of Exchange worth $5 billion? Readers may recall that the small town agricultural commodities trader briefly grabbed the headlines for holding $5 billion worth international bills of exchange, before quietly fading away.
On January 10, 2013, a senior Income Tax Department official informed the media that the $5 billion worth international bills of exchange appeared to be bogus, and that this had been orally confirmed by the Barclays Bank which supposedly issued the instruments on February 25, 2011; these were due to mature in February 2015.
Ramalingam was to appear before the Income Tax Department on Friday, January 11, but the meeting was abruptly cancelled and no reasons given for the same.
The story of the jaw-dropping wealth of the Tirupur district trader has taken so many twists and turns in the recent fortnight that they raise legitimate doubts about the conduct of the case. Soon after the raid, it was said Ramalingam was a nondescript agricultural commodity trader with a modest annual income of just Rs 3 lakh per annum, which kept him out of the tax net. His office-cum-residence is an 86-cent plot on the Dharapuram-Palani road, of which 27 cents is rented to a petrol bunk. The combined income from trade and rentals is Rs 3 lakh.
He ostensibly came to the notice of tax authorities when he suddenly purchased a sports utility vehicle for Rs 17 lakh without a loan. It was further alleged that Ramalingam had submitted a proposal to the Centre for a petroleum product refinery worth thousands of crores of rupees at Thondi, Ramanathapuram district, for which he set up a company, Baranidhar Refinery Private Limited. Informed sources say the story of the refinery is a red herring.
During the raids, the authorities found US Treasury Bonds worth $5 billion (Rs 28,000 crore), which later changed to $5 billion worth International Bills of Exchange (five in number). Ramalingam claimed he purchased the bills with gold bonds from a person based in Brazil, and was raising funds for his petroleum refinery. Possessing such huge bills of exchange without disclosure to income tax authorities is illegal.
After initially asking the Reserve Bank of India and State Bank of India to investigate the bonds, it was announced on January 11 that the documents were being flown to the United States for physical verification. The cognoscenti sniggered it was the beginning of a cover-up.
Sure enough, barely 24 hours later – it takes a minimum 17 hours to fly to America, and the officials carrying the documents would first check into a hotel and recover from jetlag before arriving at the bank, which would take time to study the documents and give a written report about its findings – Ramalingam’s bills of exchange were pronounced a hoax! The Government now says it will investigate his frequent visits to Myanmar.
Informed sources say this development ties in with foreign media reports that Italy’s anti-mafia prosecutors seized $6 trillion worth of ‘fake’ US bonds in February 2012. The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich; eight people were arrested in this connection. The financial fraud uncovered included two cheques issued through a bank in London for £205,000 ($325,000), not backed by available funds. The probe also yielded fake bonds for $2 billion in Rome. The individuals involved were planning to buy plutonium from Nigerian sources, according to phone conversations monitored by the police, a Bloomberg report said. All this suggests a massive international money-laundering scheme with as yet unknown objectives.
The raid at Ramalingam’s premises also yielded fixed deposits worth Rs 1.83 crore in the names of Ramalingam and his son with the State Bank of India and Karur Vysya Bank. An income tax official said Ramalingam had received Rs 2.5 crore from a Singapore company by promising it a loan from a financial institution. He used the funds to buy a new car, repair his house and deposited the balance.
The Ramalingam case seems destined to go the way of the investigations into Hasan Ali Khan, the Pune stud farm owner who shot to fame in 2007 with an account with UBS, Zurich, with $8 billion in deposits. The account has since reputedly been emptied; what else? Un-embarrassed, the Union Finance Ministry quietly informed Parliament’s Standing Committee on Finance last month that it was simply ‘not possible’ to recover tax arrears of about Rs 91,000 crore from Hasan Ali Khan.
Despite growing public pressure on the issue of corruption, the UPA Government continues to sit on a list of 26 people with accounts in a Liechtenstein bank, handed over by German authorities. The UPA stand is that the names cannot be revealed as they were received on condition of ‘confidentiality’. Experts estimate that around $500 billion of Indian money is stashed away in illegal havens abroad.
Nor is the unaccounted money circulating within the country less impressive. Prior to the Uttar Pradesh Assembly election in February-March 2012, income tax authorities raided Centrestage Mall, Sector 18, Noida, and reportedly seized Rs 100 crore from a basement vault allegedly belonging to liquor baron late Ponty Chadha (Gurdeep Singh Chadha). Five cash counting machines were also recovered with the cash. A major national daily put the recovery at over Rs 125 crore in cash, while a leading regional daily reported Rs 200 crore seized, plus an additional Rs 38 crore seized from his son-in-law. But two weeks later, the stash diminished to Rs 11 crore in cash, jewellery and fixed deposits! How can Rs 100 crore (if not more) become Rs 11 crore, when estimates of cash seized are made on the basis of volume of the bundles? A 90 per cent margin of error merits an explanation.