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What You Should Know About The Law On Fugitive Economic Offenders

fugitive economic offenders

On July 19, Monsoon session of the Parliament saw the Fugitive Economic Offenders Bill, 2018 passed. Now, the law will force the offenders who flee the country after committing economic offence to return and face the law lest their properties will be attached. Considering the fact that the Non-Performing Assets (NPA) ballooned under previous administration which is apparently the reason for the stress currently the banking sector has been in, framing of this law by present government is a significant step in cleaning the inherited mess.

The Essence

Before we assess the significance of this law in five points, let’s quickly outline the key features.

  • Special Court for a declaration that an individual is a fugitive economic offender
  • Attachment of the property of a fugitive economic offender
  • Confiscation of the property of an individual declared as a fugitive economic offender resulting from the proceeds of crime
  • Confiscation of other property belonging to such offender in India and abroad, including benami property
  • Disentitlement of the fugitive economic offender from defending any civil claim
1. Cleaning Up the Inherited Mess

The Opposition often chooses to attack the government on the issue of some businessmen flying away from India to evade the money they owe to banks or defrauded them of. But the fact is that these reported frauds and loans are from the UPA era, be it in the case of Vijay Mallya or Nirav Modi. The previous administration didn’t even think of passing laws against fugitive economic offenders. The manner in which loans were given under UPA regime has become evident now after Prime Minister Narendra Modi has revealed some important figures speaking on the No Confidence Motion. He said, while the banks loaned 18 lakh crores in the period of 60 years of Independence up to 2008, between 2008 and 2014, the total disbursement stood at Rs. 52 lakh crores.

So, the Fugitive Economic Offenders Bill, 2018 is one of the many steps taken by the present government to set right the mess gifted by the previous administration. With this bill becoming a law, economic offenders will think twice before fleeing the country because the law empowers authorities to attach and confiscate the assets of fugitive economic offenders.

2. Shortcomings in Earlier laws

While discussing the Bill a BJD MP reportedly said that there was no dearth of laws in this regard. In fact, this narrative that the existing laws were enough to deal with defaulters has been put forward earlier by the Congress also outside the house.

However, an explanatory note to the Fugitive Economic Offenders Bill clearly lists the inadequacies of existing laws in deterring economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. Take a look.

3. Question of Ambit – Why Only Offence of Rs 100 Crore & More?

Member of Parliament from Congress, Shashi Tharoor while discussing the Bill reportedly asked why it considered only the offence involved Rs 100 crore or more. The explanatory note says that it is to ensure that courts are not overburdened with such cases. Finance Minister Piyush Goyal has further explained in his reply on the floor of the house saying that the rich offenders should not get away by taking advantage through delaying cases. Moreover, it is also common observation that the persons choose to avoid legal procedure by flying away usually come in the ‘Rs 100 crore and more’ range.

4. Rights of the Accused- A False narrative

During the discussion, some members have argued that any person is innocent until proven guilty. In the first place, the need of this law aroused because the accused is not willing to subject himself to the existing legal procedure to prove his innocence. If anyone wants to use the argument that he is innocent until proven guilty, then why flee the country?

However, there are due procedures laid out in the law to deal with fugitive economic offenders. There will be witness record during seizure of any property. A notice will be served before the administration taking over such property. Some of the procedures that follow has been specified in the law as the below snapshot notes.

There will be due procedure of hearing.

Again, the burden of providing proof lies with the administration. So, there is no room to argue that accused may be subjected to exploitation by this law.

5. Following International Standards

The legal framework to deal with fugitive economic offenders could have been put in place by the previous administration too, but they did not. Because, India has ratified United Nations Convention against Corruption back in 2011. This convention has provision for non-conviction-based asset confiscation for corruption-related cases. The Fugitive Economic Offenders Bill exactly serves this purpose. Therefore, the credit of bringing our corruption laws in line with the standard of international laws goes to the present government, whereas the previous administration did not exercise the option available to them.

Conclusion

Passing the Fugitive Economic Offenders Bill is in tune with the various measures the present government has been taking to bring financial discipline, transparency and accountability in the system. Some of the previous measures in this regard are:

  • SIT on black money
  • Insolvency and Bankruptcy Code
  • Benami Transactions (Prohibitions) Act 2016

 

Law on fugitive economic offenders is another significant step in the series of reforms.