SIT cites report of agency funded by Ford Foundation

“India among the top five exporters of illicit capital”

May 18, 2015 01:20 am | Updated November 16, 2021 05:05 pm IST - NEW DELHI:

The Union government may have put the Ford Foundation on watch citing national security concerns, but the Special Investigation Team on black money appointed by it has cited reports of an agency funded by the Foundation to highlight the issue of illegal financial outflows from India.

The SIT in its latest report on black money — submitted to the Supreme Court — has quoted reports by Global Financial Integrity (GFI), a Washington DC-based research and advisory organisation.

The agency, according to its website, is funded by U.S.-based Ford Foundation, apart from the United Nations Development Programme, international financial transparency coalitions and financial institutions besides individuals and governments of Denmark, Finland, Nigeria and Spain.

The SIT has quoted a GFI-2013 report stating that illicit financial flows from India – ranked fifth out of 142 countries — remains uncontrolled and that in 2011, it stood at $94,933 million.

The SIT highlighted that in the subsequent report dated December 15, 2015, GFI mentioned that illicit financial flows from India for the year 2012 touched $94,757 million, that is a sum of Rs.5,93,557 crore approximately.

The cumulative illicit outflow over the decade was estimated at $4,39,587 million and instead of the fifth rank, as per the 2013 report, last year’s GFI report ranked India fourth out of 145 countries.

The latest GFI report puts India among the top five exporters of illicit capital over the past decade, and it is also the fifth in the list of 20 largest export under-invoicers with the respective proceeds requirements (2003-12).

Invoices manipulated

It states that Asia accounted for 40.3 per cent cumulative illicit financial flows from the developing world during 2003-2012 and that the vast majority of such outflows, amounting to 85.3 per cent, were due to trade misinvoicing (manipulating the price, quantity, or quality of a good or service on an invoice so as to shift capital illicitly across borders).

Taking up the issue of over/under invoicing, the SIT discussed the GFI reports with the Directorate of Revenue Intelligence (DRI), asking the agency to conduct a study of some transactions with one or two countries for some items.

Subsequently, the DRI submitted a preliminary study report on the trade mismatch between India and China, establishing a pattern of under valuation to avoid import duties in India.

“Informal channels”

The agency found that the differential between the actual value and declared value of the imported products were being sent through “informal channels.”

The Ford Foundation, which has been accused by the Gujarat government of interfering in the country’s internal matters and abetting communal disharmony, was put on the Union Home Ministry “prior approval” watch list last month.

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