Infusion of black money must be tackled

Once declared a fugitive economic offender, the government can confiscate the proceeds of the crime

With the Indian Parliament working smoothly, enough business is being transacted including several bills by the Government, seeing the light of day.  In fact it is after a long period of time that serious business is being transacted and progressing in both Houses of Parliament. The monsoon session, though a short one, has been meaningful given that it began with a no trust vote at the very outset setting the tone for smooth functioning of the Parliament: something that had eluded it for several sessions.

Among several bills that were passed this week, a landmark one was the Fugitive Economic Offenders Bill, 2018. With the Upper House,  Rajya Sabha, ensuring its passage earlier this week,  the Bill is soon to become law after getting the President’s assent. The Lok Sabha had passed the bill on July 19.

The Bill, once it becomes law, will empower investigating agencies to attach and confiscate properties and assets of those who flee the country after committing economic offences

If there is a warrant for arrest issued by any court in India against a person for allegedly committing one or more of these scheduled offences, to the tune of Rs 100 crores or more, and the person concerned evades trial by going abroad, then he or she shall be considered a ‘fugitive economic offender’ or FEO. The list of offences include cheating, forgery, fraud, corruption, insider trading, customs evasion among others.

The Government has been in the eye of a storm after high-profile fugitives like Vijay Mallya, Nirav Modi and Mehul Choksi have left the country after shortchanging banks. The  recent financial frauds to the tune of Rs 13,000 crore PNB scam where diamantaire Nirav Modi and  Mehul Choksi fled the country and before that Vijay Mallya case have put the Government in a spot. Nirav Modi’s photograph with Prime Minister Modi in Davos during the World Economic Forum created a furore and fingers are being pointed at his alleged closeness to Modi.

The Nirav Modi case, in which the jeweller is alleged to have got unsecured loans of more than Rs 11,000 crore from a public-sector bank, hit headlines shifting focus from Vijay Mallya who had fled the country to avoid being arrested for economic fraud. His unpaid loans exceed a sum of Rs 9,000 crore.

The government’s intent was made clear by Union Minister  Arun Jaitley’s in his Budget speech last year.

Following an application filed to a special court for declaration of FEO, the government can attach, prevent the trading or selling of  any properties mentioned in it for 180 days.

Once declared a fugitive economic offender, the government can confiscate the “proceeds of the crime”, even if it is not owned by the fugitive offender, and any other properties they own as well. If the fugitive does not turn up within the stipulated time, the state would have the right to control the properties.

The operative part of this is that once the person has been declared a financial offender the government becomes full custodian of the attached property. This provision comes into effect even before the case has been adjudicated by the court, with a judge deciding guilty or not guilty.

Offences involving amounts of ₹100 crore or more fall under the purview of this law.

While very few can dispute the intent behind this law, there can be questions about some provisions including the key question on whether it would be applied with retrospective effect and once in it becomes effective will it help in bringing back those who have already fled?

Given that in the eye of the storm are the likes of Mehul Choksi, Nirav Modi and Vijay Mallya, unless it take into the net such big fish, it will be a measure which is half done and as an MP put it “too little to late”.

This seems to be a grey area and there are indications that it would include them because as per the Bill a fugitive economic offender is defined as one against  whom a warrant for arrest for certain offences has been issued. Given this, Mallya and company should have much to worry about. In any case, with Arun Jaitley, Union Finance Minister, though out of action for some months now because of ill health, it is unlikely that past offenders will be let off. If sources are to be believed, it was Jaitley’s tireless efforts and determination that has led to the noose being tightened around them.

Jaitley’s assertion that the law would apply to all cases, “old and new”, sets rests all doubts that could have arisen or are being raised by political opponents and critics. The law it cannot be denied is harsh and aims at not letting offenders go scot free. At another level, confiscating their properties is enough pressure to make them return to India; if not it helps the government to recover the financial losses that they have caused by willful intent. As of now, the existing laws are quite inadequate and leave many gaps to nab an economic offender if he decides to evade the law.

Also once he leaves the country there is nothing that can bring him back if he wishes not to cooperate. The fear of the government zeroing in on his properties can  help rein him in.

However there is a counter argument that once the properties are confiscated then it leaves very little incentive or reason for a fugitive to return to India and face proceedings. Government sources have dismissed this as a “half truth” and clarified that  if an offender returns to India and agrees to face legal proceedings, then the property in question will not be attached.

Questions have also been raised about the ineffectiveness of this  law in countries with which India does not have an extradition treaty and the 100 crore threshold. While the Government has made it clear that it would use diplomatic channels, this is seen as easier said than done because were that effective the likes of Mallya and Choksi would be in India by now.  

However, the Rs 100-crore threshold fixed for acting against economic offenders, is being defended by the government on grounds that the clause would ensure speedy investigation on big offenders. By keeping a threshold of Rs 100 crore, a large number of transactions get omitted from the Act. A person who may have committed economic offences up to Rs 80 crore or 90 crore, cannot be declared an FEO due to this clause. Also the power to declare a person FEO without a trail would  tantamount to penalising an individual even before conviction and can thus  be challenged for being arbitrary.

 Despite the Opposition shrill, there is evidence of  the scam ridden UPA government also stating that  black money cannot be tackled without stringent laws. That this law is stringent is without doubt as is the governments intent to come down heavily on offenders and for that the Government only deserved to be patted on its back.

The writer is a senior Indian journalist, political commentator and columnist of The Independent. She can be reached at: ([email protected])

 

 

Infusion of black money must be tackled

Once declared a fugitive economic offender, the government can confiscate the proceeds of the crime

With the Indian Parliament working smoothly, enough business is being transacted including several bills by the Government, seeing the light of day. In fact it is after a long period of time that serious business is being transacted and progressing in both Houses of Parliament. The monsoon session, though a short one, has been meaningful given that it began with a no trust vote at the very outset setting the tone for smooth functioning of the Parliament: something that had eluded it for several sessions. Among several bills that were passed this week, a landmark one was the Fugitive Economic Offenders Bill, 2018. With the Upper House, Rajya Sabha, ensuring its passage earlier this week, the Bill is soon to become law after getting the Presidents assent. The Lok Sabha had passed the bill on July 19. The Bill, once it becomes law, will empower investigating agencies to attach and confiscate properties and assets of those who flee the country after committing economic offences If there is a warrant for arrest issued by any court in India against a person for allegedly committing one or more of these scheduled offences, to the tune of Rs 100 crores or more, and the person concerned evades trial by going abroad, then he or she shall be considered a fugitive economic offender or FEO. The list of offences include cheating, forgery, fraud, corruption, insider trading, customs evasion among others. The Government has been in the eye of a storm after high-profile fugitives like Vijay Mallya, Nirav Modi and Mehul Choksi have left the country after shortchanging banks. The recent financial frauds to the tune of Rs 13,000 crore PNB scam where diamantaire Nirav Modi and Mehul Choksi fled the country and before that Vijay Mallya case have put the Government in a spot. Nirav Modis photograph with Prime Minister Modi in Davos during the World Economic Forum created a furore and fingers are being pointed at his alleged closeness to Modi. The Nirav Modi case, in which the jeweller is alleged to have got unsecured loans of more than Rs 11,000 crore from a public-sector bank, hit headlines shifting focus from Vijay Mallya who had fled the country to avoid being arrested for economic fraud. His unpaid loans exceed a sum of Rs 9,000 crore. The governments intent was made clear by Union Minister Arun Jaitleys in his Budget speech last year. Following an application filed to a special court for declaration of FEO, the government can attach, prevent the trading or selling of any properties mentioned in it for 180 days. Once declared a fugitive economic offender, the government can confiscate the proceeds of the crime, even if it is not owned by the fugitive offender, and any other properties they own as well. If the fugitive does not turn up within the stipulated time, the state would have the right to control the properties. The operative part of this is that once the person has been declared a financial offender the government becomes full custodian of the attached property. This provision comes into effect even before the case has been adjudicated by the court, with a judge deciding guilty or not guilty. Offences involving amounts of ₹100 crore or more fall under the purview of this law. While very few can dispute the intent behind this law, there can be questions about some provisions including the key question on whether it would be applied with retrospective effect and once in it becomes effective will it help in bringing back those who have already fled? Given that in the eye of the storm are the likes of Mehul Choksi, Nirav Modi and Vijay Mallya, unless it take into the net such big fish, it will be a measure which is half done and as an MP put it too little to late. This seems to be a grey area and there are indications that it would include them because as per the Bill a fugitive economic offender is defined as one against whom a warrant for arrest for certain offences has been issued. Given this, Mallya and company should have much to worry about. In any case, with Arun Jaitley, Union Finance Minister, though out of action for some months now because of ill health, it is unlikely that past offenders will be let off. If sources are to be believed, it was Jaitleys tireless efforts and determination that has led to the noose being tightened around them. Jaitleys assertion that the law would apply to all cases, old and new, sets rests all doubts that could have arisen or are being raised by political opponents and critics. The law it cannot be denied is harsh and aims at not letting offenders go scot free. At another level, confiscating their properties is enough pressure to make them return to India; if not it helps the government to recover the financial losses that they have caused by willful intent. As of now, the existing laws are quite inadequate and leave many gaps to nab an economic offender if he decides to evade the law. Also once he leaves the country there is nothing that can bring him back if he wishes not to cooperate. The fear of the government zeroing in on his properties can help rein him in. However there is a counter argument that once the properties are confiscated then it leaves very little incentive or reason for a fugitive to return to India and face proceedings. Government sources have dismissed this as a half truth and clarified that if an offender returns to India and agrees to face legal proceedings, then the property in question will not be attached. Questions have also been raised about the ineffectiveness of this law in countries with which India does not have an extradition treaty and the 100 crore threshold. While the Government has made it clear that it would use diplomatic channels, this is seen as easier said than done because were that effective the likes of Mallya and Choksi would be in India by now. However, the Rs 100-crore threshold fixed for acting against economic offenders, is being defended by the government on grounds that the clause would ensure speedy investigation on big offenders. By keeping a threshold of Rs 100 crore, a large number of transactions get omitted from the Act. A person who may have committed economic offences up to Rs 80 crore or 90 crore, cannot be declared an FEO due to this clause. Also the power to declare a person FEO without a trail would tantamount to penalising an individual even before conviction and can thus be challenged for being arbitrary. Despite the Opposition shrill, there is evidence of the scam ridden UPA government also stating that black money cannot be tackled without stringent laws. That this law is stringent is without doubt as is the governments intent to come down heavily on offenders and for that the Government only deserved to be patted on its back. The writer is a senior Indian journalist, political commentator and columnist of The Independent. She can be reached at: ([email protected])