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Current Affairs

Fugitive Economic Offender

Date: 06 December 2019 Tags: Bills & Laws

Issue

A Mumbai PMLA judge declared jeweller Nirav Modi, key accused in the Punjab National Bank (PNB) fraud case, a “fugitive economic offender” (FEO) based on a plea by the Enforcement Directorate (ED).

 

Background

At the beginning of this year, a special court had declared liquor baron Vijay Mallya an FEO, also on a plea by the ED, the first such designation of an accused individual.

 

Details

  • An FEO is defined by The Fugitive Economic Offenders (FEO) Act, 2018 as “any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who (i) has left India so as to avoid criminal prosecution; or (ii) being abroad, refuses to return to India to face criminal prosecution”.

  • The FEO Act aims “to provide for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts, to preserve the sanctity of the rule of law in India and for matters connected therewith or incidental thereto”.

  • Economic offences relate to fraud, counterfeiting, money-laundering, tax evasion, etc. Among the laws available for prosecuting these offences are The Prevention of Money-Laundering Act (PMLA), 2002, The Benami Properties Transactions Act, 1988, and The Companies Act, 2013.

Need for the Act

  • The Finance Ministry released a draft Bill to address cases of high-value economic offenders fleeing the country to avoid prosecution.

  • It observed that existing civil and criminal laws did not contain specific provisions to deal with such offenders, and that a new legal framework was needed to prosecute them.

  • The ministry also argues that procedures under these laws were time-consuming, led to roadblocks in investigation and impacted the financial health of banks.

Process for declaring Economic Offender

  • Under the Act, an application must be filed in the special court asking that a particular individual may be declared an FEO.

  • The application must be accompanied by “reasons for the belief that an individual is a fugitive economic offender; any information available as to the whereabouts of the fugitive economic offender; a list of properties or the value of such properties believed to be the proceeds of crime”, etc.

  • The special court may then issue notice to the individual to appear at a specified place, and drop the proceedings if the individual complies.

  • If the special court is satisfied that an individual is an FEO, it may, record so in an order, along with reasons. The court may then order the confiscation of the properties of the accused individual in India or abroad.

Fugitive Economic Offender

Date: 24 September 2019 Tags: Bills & Laws

Issue

The Enforcement Directorate (ED) has moved an application before the special Prevention of Money Laundering Act court to declare the controversial televangelist Zakir Naik a Fugitive Economic Offender under the new law.

 

Background

The move comes after the agency obtained a fresh non-bailable warrant against Mr. Naik last week. If Naik does not appear before a court in time, and is declared a fugitive economic offender, the agency will be able to confiscate his assets in India and abroad.

 

Fugitive Economic Offenders Act

The Fugitive Economic Offenders Act, 2018 is an Act of the Parliament of India that seeks to confiscate properties and assets of economic offenders that evade prosecution by remaining outside the jurisdiction of Indian courts.

 

Provisions

  • Economic offences with a value of more than Rs 100 crores, which are listed in the schedule of the Fugitive Economic Offenders Act, come under the purview of this law.

  • As per the Act, a ‘Special Court’ under the Prevention of Money Laundering Act, 2002 has to declare a person as a Fugitive Economic Offender for the law to come into effect.

  • The Bill allows authorities to provisionally attach properties of an accused, while the application is pending before the Special Court.

  • Upon declaration as an FEO, properties of a person may be confiscated and vested in the central government, free of encumbrances (rights and claims in the property). 

  • Under the Bill, any court or tribunal may bar an FEO or an associated company from filing or defending civil claims before it.

  • The Bill does not require the authorities to obtain a search warrant or ensure the presence of witnesses before a search.  This differs from other laws, such as the Code of Criminal Procedure (CrPC), 1973, which contain such safeguards.

 

Drawbacks

  • Barring persons from filing or defending civil claims may violate Article 21.

  • Use of sale proceeds from confiscated property not specified.

  • Provisions related to search may not contain safeguards.

  • Procedures under the Bill similar to existing laws.