India is on the verge of gaining some leverage in the Devyani Khobragade case with the unearthing of what looks like a gigantic multi-year tax evasion scam by the American Embassy School here. Even as the US has declined to drop charges against Khobragade on the ground that it does not mess around with domestic law, India now can pressure the Americans to do so, given the growing dimensions of the tax evasion. The Khobragade visa fraud case is now counterbalanced by what seems to be an American tax fraud in India that either went unnoticed or was ignored in the general need to defer to Uncle Sam in the past. In fact, there is some evidence—quoted in a New York Times story—that the spouses of American diplomats may have been encouraged to lie about their status to avoid having to get a separate work visa in India. Just as Devyani’s maid may have lied about her wages, US diplomats’ spouses may also have misrepresented their status. US Embassy in Delhi.
The Americans who threw the rule book at Khobragade and preached visa ethics are now finding themselves on the wrong side of the law here. Washington needs to be worried, very worried, on two counts. First, credible sources told this writer that the American Embassy School (AES) has been violating a number of Indian laws and fraudulently evading income tax since 1972. The cumulative tax evaded thus far and the penalties would easily run into scores of crores, if not more. The American diplomats in India have also been found to be indulging in an institutionalised mechanism of visa and tax frauds for decades. Worse, unlike the Devyani incident, which was a one-off case, the AES scam has been routinely perpetrated at the behest of top officials of the US embassy in New Delhi.