The Union government may consider enacting the Fugitive Economic Offenders Bill to confiscate assets of those who flee the country and refuse to return after committing frauds in excess of Rs. 100 crore.
- Major bank frauds have come to light in quick succession of late. Examples:
1.Nirav Modi, a diamond merchant accused in the Rs. 11,400-crore Punjab National Bank case, and his family members are currently abroad. The passports of Mr. Modi and his uncle Mehul Choksi have been revoked.
2.In another case involving Rs. 389 crore of the Oriental Bank of Commerce, a Delhi-based jewellery exporter and his business partners fled the country in 2014.
Why the need of new legislation?
Under the existing laws, the bank has failed to recover the dues in the past three years.
- A draft of the Bill, which is in consonance with similar legislation in several countries, was circulated last May seeking comments from all stakeholders.
- The Bill was cleared by the Union Law Ministry with certain recommendations on reconciliation of provisions with the existing laws.
- The draft Bill followed an announcement in the Union Budget for 2017-18 that the government planned to introduce a legal measure to confiscate assets of the economic offenders who flee to foreign jurisdictions to escape the clutches of law.
- The move came after Vijay Mallya, who owed more than Rs. 9,000 crore to the public sector banks, flew out of the country and refused to come back
- . It set off prolonged and multi-pronged legal proceedings, with the government still fighting a legal battle for his extradition from the U.K.
What draft bill says?
- The draft Bill defines a fugitive economic offender as any individual against whom an arrest warrant has been issued and who has either left the country or refuses to come back to face prosecution.
- As proposed, the Enforcement Directorate will be empowered under the Prevention of Money Laundering Act (PMLA) to initiate the proceedings.
- It has a provision enabling repayment of dues to creditors by disposing of confiscated assets, in case the accused offender continues to evade prosecution.
- As listed in the draft Bill’s schedule, it will be applicable to various financial and allied offences as defined under the Indian Penal Code, the Prevention of Corruption Act, the Securities and Exchange Board of India Act, Customs Act and so on.