India prosecutes "black money" suspects, more to come

By Suchitra Mohanty and Aditya Kalra

NEW DELHI (Reuters) - The government said on Monday that several individuals, including a former director of consumer goods maker Dabur Ltd, were being prosecuted on suspicion of hiding undeclared cash outside the country, a court filing showed.

The government disclosed names of one company, Timblo Private Ltd, and seven individuals suspected of violating tax laws. Two of those named denied wrongdoing, while one director at Timblo said she would react after reading the court filing. Four other Timblo directors could not be reached.

Prime Minister Narendra Modi's government says it wants to bring back illicit funds deposited by Indians in banks outside the country. Such funds, often hidden abroad to avoid local tax, are widely referred to in India as "black money".

The opposition accuses the government of exploiting the issue for electoral gain, and of waging a vendetta against politicians linked to the last Congress government that was ousted by Modi in a general election in May.

Finance Minister Arun Jaitley said in an Oct. 21 television interview that the Congress would be "embarrassed" by the names of suspects when they are revealed in court. Tax treaties bar the disclosure of names until charges are framed.

"The government will disclose names against whom we have prosecutable evidence," Jaitley told reporters on Monday, referring to other cases still under investigation.

Monday's court filing named Pradip Burman, a former Dabur director; Pankaj Lodhiya, a bullion trader; and Goa-based miner Timblo Private Ltd, along with five directors who share the same family name of Timblo - Radha, Chetan, Rohan, Anna and Mallika.

Prosecution of those named has been launched under the income tax law, the government said in a filing to the Supreme Court that was seen by Reuters.

"Several more cases are under process and the names of persons prosecuted will become public in due course," the filing also said.

LEGALLY OPENED

Dabur denied wrongdoing, saying Burman's account was opened legally when he was not a resident of India. The company's shares fell as much as 8.9 percent before ending with a loss of 3 percent.

Lodhiya told a news channel he had no bank account outside India. Calls to his office outside working hours went unanswered. Radha Timblo, a company director, told a television channel she would issue a statement after reading the court filing. The four other named directors could not immediately be reached.

Illegal deposits abroad cost billions of dollars in lost revenue and Modi had promised his government would change laws or enact new measures to bring back such funds. On taking office, he appointed a panel to investigate the matter.

While there is no official estimate of the amount of money illegally deposited abroad, Washington-based think-tank Global Financial Integrity has estimate India suffered $344 billion in illicit fund outflows between 2002 and 2011.

India has worked with countries including Switzerland to obtain information about its citizens who it believes may be hiding unaccounted money in offshore financial centres. Switzerland has shown willingness to help, the government says.

"This development is very significant. Earlier, the Swiss government had not agreed to provide any information in such cases," the government said in the court document.

(Additional reporting by Manoj Kumar in New Delhi and Zeba Siddiqui in Mumbai; Writing by Aditya Kalra; Editing by Douglas Busvine and David Holmes)