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Tuesday, July 17, 2018

What is the Fugitive Economic Offenders Ordinance 2018?

The Fugitive Economic Offenders Bill was first introduced in Lok Sabha on March 12 during the Budget Session of the Parliament but could not be passed due to logjam over various issues.

By: Express Web Desk | New Delhi | Updated: April 21, 2018 7:21:33 pm
What is the Fugitive Economic Offenders Ordinance 2018 Vijay Mallya (left) and Nirav Modi.

The Union Cabinet led by Prime Minister Narendra Modi on Saturday approved the Finance Ministry’s proposal of promulgating the Fugitive Economic Offenders Ordinance, 2018 which will empower authorities to attach and confiscate properties and assets of economic offenders like loan defaulters who flee the country.

After the recent financial frauds came to fore in India, especially the Rs 13,000 crore PNB scam where diamantaire Nirav Modi and Mehul Choksi fled the country, it became apparent that the existing civil and criminal provisions are not entirely adequate to deal with the severity of the problem. The absence of offenders during investigations poses problems for the probing agencies apart from undermining the law of the country.  The ordinance will come into effect after the assent of the President.

READ | PNB fraud case: Government seeks nod to seize properties of accused

The benefit of the ordinance:

The ordinance is expected to re-establish the rule of law as the accused will be forced to return to India and face trial for his offences. This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.

The impact of the ordinance:

It is expected that the creation of a special forum for a speedy confiscation of the proceeds of crime, in India or abroad, would force the fugitive to return to India to submit to the jurisdiction of courts in India to face the law in respect of scheduled offences.

Strategy for implementation and targets:

The ordinance makes provisions for a court (‘Special Court’ under the Prevention of Money-laundering Act, 2002) to declare a person as a ‘Fugitive Economic Offender.’ A Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution. A scheduled offence refers to a list of economic offences contained in the Schedule to this Ordinance. Further, in order to ensure that courts are not over-burdened with such cases, only those cases where the total value involved in such offences is 100 crore rupees or more, is within the purview of this ordinance.

Other provisions under the ordinance:

(i) making an application before the special court for a declaration that an individual is a fugitive economic offender;
(ii) attachment of the property of a fugitive economic offender and proceeds of crime;
(iii) issue of a notice by the special court to the individual alleged to be a fugitive economic offender;
(iv) confiscation of the property of an individual declared as a fugitive economic offender or even the proceeds of crime;
(v) disentitlement of the fugitive economic offender from defending any civil claim; and
(vi) appointment of an administrator to manage and dispose of the confiscated property under the act.

If at any point of time in the course of the proceeding prior to the declaration, however, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional court, proceedings under the proposed Act would cease by law. All necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal to the high court have been provided for.

The expenditure incurred:

Since the approved law would utilise the existing infrastructure of the special courts constituted under the Prevention of Money-laundering Act, 2002 (PMLA) and the threshold of scheduled offence is high at Rs 100 crore or more, no additional expenditure is expected on the enactment of the ordinance.

The Fugitive Economic Offenders Bill was first introduced in Lok Sabha on March 12 during the Budget Session of the Parliament but could not be passed due to logjam over various issues.

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