By Zarnaab Aswad
In order to tighten the noose on India’s fugitive billionaire problem, the cabinet has cleared the Fugitive Economic Offenders Bill (FEOB), to be placed before the Parliament this week. The Bill, which was first announced in the Finance Minister’s 2017 Budget speech in view of Vijay Mallya’s absconding, among others, is being expedited as a direct fallout of the Nirav Modi scam in which Mr Modi is alleged to have fled away with more than 11,500 crores from Punjab National Bank. Few see this as an attempt to control the narrative criticising the government for its failure to prevent scams like these. However, given the apparent ease with which economic offenders manage to flee India and cock a snook at the banking and judicial system, the proposed law to seize their wealth can be viewed in a positive light.
“We will try and make sure that this is passed as fast, as expeditiously as possible because we can’t allow people to make a mockery of the law; that you first indulge in loot and then refuse to submit to the jurisdiction of our legal system, and I think we have a very responsible Parliament,” the Finance Minister said on Thursday in his briefing.
About the bill
The objective of the Bill is to provide for measures to deter economic offenders from evading the process of Indian law by leaving the country to avoid the clutches of Indian courts and authorities. Cases, where the total value involved in offences is ?100 crore or more, will come under the purview of this legislation.
The Bill defines economic offender as “any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who: (a) either leaves or has left India to avoid criminal prosecution; or (b) refuses to return to India to face criminal prosecution.”
An in-depth study
An individual may be declared a fugitive economic offender by a Special Court on an application in prescribed form made by a Director appointed by the central government (Enforcement Directorate) comprising of reasons for such belief. The court will subsequently issue a notice to the person so named to present himself at a specified place at a specified time. Should the offender fail to do so, she/he will be declared as such and his/her listed properties and ‘proceeds of crime’ will be confiscated. Once the property is confiscated, the offender is disqualified from either filing or defending a civil claim in court. This dis-entitlement even applies to companies, with the law stating that even they will not be permitted to file or defend civil claims if any promoter or key managerial personnel or majority shareholder of the company has been declared a fugitive economic offender. While the proceedings are pending, the Special Court will appoint an ‘administrator’ to oversee the confiscated property. The administrator will be responsible for disposing of the property and proceeds of such disposal will be used to satisfy creditors’ claims.
The deterrent value of Fugitive Economic Offenders Bill
Questions have been raised if the law can be applied retrospectively, to the alleged crimes of the likes of Nirav Modi, Mehul Choksi, Vijay Mallya, and Lalit Modi. The Bill does not spell this out. If it is not retrospective, the abovementioned absconders are out of the purview of the Bill.
What is also notable is that the law cannot force either Nirav Modi or Vijay Mallya to return; this is wholly dependent on extradition processes with the countries they have fled to. The speed of extradition process is dependent on the Indian court’s ability to convict offenders as quickly as possible. With the FEOB, success rides on the slim hope that the threat of confiscation of property will act as a severe deterrent to those seeking to flee or as a big incentive for fugitives to return.
Apart from this, experts have also raised worries that portions of the law conferring absolute powers to the government might not pass the test of constitutionality before courts. It is often pointed out that the Bill allows the government to take control of property based only on mere allegations and not a conviction, disentitling entire companies from defending themselves in civil cases, meaning all the investors would be at risk if even just one of them has been accused of a crime.
The Bill is well-intentioned while its utility and effectiveness can best be assessed in its implementation.
Featured Image Source: Flickr
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