ED gets power to impound fleeing economic offenders' property

Finance Minister Piyush Goyal said the Bill will deter people from fleeing, and those who have already fled will return out of fear of attachment of their properties

Parliament on Wednesday passed the Fugitive Economic Offenders Bill, but not before the Opposition criticised the Narendra Modi government for lacking the political will to either bring back black money stashed abroad or extraditing economic offenders like Vijay Mallya, Mehul Choksi, and Nirav Modi.

The Rajya Sabha passed the Bill with a voice vote on Wednesday. The Lok Sabha had passed the Bill on July 19. The Bill - becomes law after the President’s assent - seeks to prevent economic offenders from fleeing the country and evading the legal process. It also gives teeth to the Enforcement Directorate to confiscate the property of fugitive economic offenders.

Finance Minister (FM) Piyush Goyal said the criminal law does not allow agencies to impound the property of fugitive economic offenders, but the proposed law would enable this.

“This Bill is an effective, expeditious, and constitutional way to stop these offenders from running away. Legislative changes or a new law must be in place to confiscate assets of such absconders till they do not present themselves in front of the courts. We will also work out what has to be done with the confiscated assets,” Goyal said.

The FM said the Bill will deter people from fleeing, and those who have already fled will return out of fear of attachment of their properties.” The government is also making efforts to get those accused, who have gone abroad to escape the legal process, extradited, he said.

Several Opposition members demanded the financial limit of Rs 1 billion for invoking the provisions of the new law be reduced to Rs 100 million. Goyal said the objective was to “catch the big offenders and not to clog the courts.”

The new law envisages special courts to declare a person a fugitive economic offender in an expeditious manner, and subsequently, their property confiscated, managed, and disposed of. He said the attachment of properties would be done in a time-bound manner.

On Tuesday, Parliament had passed the amendments to the Prevention of Corruption Act, and the government showcased the passage of the two Bills as proof of its commitment to fight corruption.

Congress Member of Parliament M V Rajeev Gowda said his party had supported the two Bills as it wanted to provide “constructive opposition”, but the government’s efforts were complete “eyewash” as both Bills had loopholes.

In a related development, the Central Bureau of Investigation has written to Antiguan authorities seeking whereabouts of fugitive jeweller Mehul Choksi, allegedly involved in the over $2 billion (Rs 143 billion) scam in state-run Punjab National Bank. According to a local newspaper Antigua Observer, Choksi had moved to the Caribbean country in July, taken citizenship in November 2017, an oath of allegiance on January 15.

As the FM moved the Bill for consideration of the Upper House, Chairman M Venkaiah Naidu asked: “Is the system so helpless not to act against offenders?” The Chairman also observed that “the question people are asking is unless there is a treaty with different countries, how will it (accused fleeing the country) be checked.”

Congress member Vivek K Tankha, a Supreme Court advocate, said there was “no shortage of laws in India. But they get away because the government does not have the will to stop wilful defaulters.”

Tankha said only 10 per cent of the black money was outside India and wanted to know what the government has done to get back 90 per cent of the black money within the country. “Why is the government pitching for a threshold of offences worth Rs 1 billion for bringing economic offenders under the purview of the legislation?” he asked, adding “even an offender of Rs 100 million is bad.”

Bharatiya Janata Party’s (BJP’s) Bhupender Yadav quoted the white paper released by the United Progressive Alliance government that black money cannot be dealt with without stringent laws. He said money confiscated from offenders may be used in the construction of highways, schools, and bridges.

Samajwadi Party’s Neeraj Shekhar said India had extradition treaties with only 47 countries and asked how the government was planning to bring the offenders back to the country.

Congress party’s Gowda said the new law should prevent economic offenders from leaving the country rather than bringing them back later. He also challenged the FM and the government to bring back even one economic offender to India before 2019.

Later at a press conference, Gowda said the Bill was a face-saving exercise three months after the Prime Minister (PM) met his Antiguan counterpart, and now Choksi has got an Antigua passport. Gowda also punched holes in the FM’s claims on deposits of Indians having reduced in Swiss banks. He said the FM was relying on unreliable data of the Bank of International Settlements (BIS), and not the more reliable data of the Swiss National Bank (SNB).

Gowda said earlier the PM and BJP would always cite the SNB data, and asked why have they now taken to relying on BIS data. He said the BIS data does not include liabilities like mutual funds, bonds, and debentures of Swiss banks towards Indian nationals, which are included in the SNB data. Gowda said if all liabilities of Swiss banks towards Indian nationals are considered, it would reflect an upward trend of deposits, and if not included a downward trend.

Tighten Noose Around Fraudsters
- Provides for special courts under Prevention of Money Laundering Act (PMLA) to hear fugitive economic offender (FEO) cases
- Person to be declared FEO if offence value over Rs 1 billion, has left country, and refuses to return
- FEOs or any firm associated with him may be barred from filing or defending civil claims
- To declare a person FEO, an application to be filed in special court under PMLA
- Special court will require person to appear at least six weeks from issue of notice
- Proceedings will be terminated if person appears; if not, allows Enforcement Directorate to confiscate properties of offender(s)