Swiss authorities have received requests for information concerning potential secret Swiss bank accounts linked to the Delhi-based microfinance NGO Sarvajan Unnati Bodhini. Ironically, the NGO has previously received funding from the Swiss Agency for Development and Cooperation (SDC).
Sarvajan Unnati Bodhini (SUB), whose implementation arm is called the Micro Insurance AcademyExternal link (MIA), was listed on Wednesday by the Swiss Federal Tax Administration in a noticeExternal link in the Federal Gazette. The notice informs the NGO of a request for information concerning alleged Swiss bank account(s).
According to standard procedure, SUB has ten days to name a Swiss representative to receive the notifications. They can also appeal against the final decision of the Swiss Federal Tax Administration regarding whether or not to share information on the financial transactions.
“Ever since its creation in 2007, SUB has submitted tax returns to the Indian tax authorities in full compliance with all the laws of the country. Such tax returns have been scrutinised in detail in various years and have been accepted by the Indian tax authorities,” David Dror, chairman and managing director of MIA, told swissinfo.ch.
There is no love lost between SUB and the Indian government, which is likely to be behind the request for administrative assistance from the Swiss tax authorities. In 2011, the NGO was involved in a landmark legal battleExternal link with the Indian government over approval to receive foreign funds. In a major victory that set an important legal precedent, the Delhi High Court accepted SUB’s petition that a delay of over 90 days for processing requests to receive foreign donor funds meant automatic approval.
However, the tax evasion scrutiny of SUB could prove to be an embarrassment for Switzerland as the SDC awarded the NGO a CHF3.2 million ($3.32 million) project in 2011 (completed in 2016) called Climate Resilience through Risk TransferExternal link.
Dror denies there is any money to be found in Switzerland.
“SUB has never opened any bank accounts outside India. It has received funds from various foreign donors in its designated Indian bank account through proper banking channels. Full details of such foreign contributions received and how the same have been spent have been filed with concerned government authorities (FCRA),” he says.
A Swiss government spokesperson confirmed to swissinfo.ch that payments were made to SUB between 2011 and 2017 as part of the SDC project.
"All the funds were paid into a banking institution in India," he said.
After the completion of the SDC project, SUB has reduced its activities and withdrawn from fieldwork. The NGO may eventually close down because it is finding fundraising difficult and has not received any fresh grants.
Request for banking information of this kind could soon become a thing of the past. As of 2017, the ‘Multilateral Convention on Mutual Administrative Assistance in Tax Matters’ has come into effect in Switzerland: countries with which Switzerland has signed agreements – including India – will no longer need to request information about their citizen’s Swiss bank accounts. The data will be handed over automatically once a year.
However, this data can only be used for tax collecting efforts and cannot be made public.
Switzerland has begun collecting such data from 2017 onwards and begun sharing it with select countries (mostly European) from 2018. India is among another batch of countries that will have to wait until 2019 for the first data exchange, pending parliamentary approval.
Update on 08/01/2021: The investigation has been closed after Indian tax authorities accepted that SUB was a legitimate NGO and legally received funds from the SDC to implement a project in India.
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