The union Cabinet has approved the Fugitive Economic Offenders Bill that seeks to confiscate and sell all assets of absconding economic offenders.
- The proposed legislation aims to empower investigating agencies to confiscate, and vest with themselves, any property of the absconding offenders without encumbrances, and will apply to cases where proceeds of the crime are above Rs 100 crore.
- The government also decided to set up a National Financial Reporting Authority (NFRA) to frame rules governing the conduct of chartered accountants and auditors.
- The NFRA will have jurisdiction over listed companies and “large unlisted” companies, while the Institute of Chartered Accountants of India will continue to oversee the remaining companies.
- The government will frame the rules that will define the threshold for companies to be supervised by the NFRA, which will have a chairman and a total of 15 members.
Who will be a fugitive economic offender?
The Fugitive Economic Offenders Bill will include a list of scheduled offences. If any individual, who has committed a scheduled offence and against whom an arrest warrant has been issued by a competent court leaves the country, refuses to return to face criminal prosecution, he will be termed as a fugitive economic offender.
The proposed Bill, which will be tabled in the second leg of the Budget Session of Parliament, empowers the government to “confiscate all of a fugitive offender’s assets in India, including benami assets”. Such a person will also be barred from pursuing any “civil claims” in the country —this move would discourage such persons from defrauding banks and leaving the country.
The Bill also has provision for confiscation of overseas assets, but this will require cooperation and “appropriate arrangements” with overseas nations.
The proposed law aims to bring to book offenders who have failed to pay back huge bank loans, and refused to return to the country to face legal action.
The country’s second-largest state-owned lender, Punjab National Bank, recently reported fraudulent transactions of about Rs 11,400 crore at its mid corporate branch in Mumbai, and said “based on these transactions, other banks appear to have advanced money to these customers abroad.”
The extent of these fraudulent transactions, allegedly done by Nirav Modi, Mehul Choksi and their companies, was revised upward to Rs 12,636 crore following fresh information from the bank on Tuesday. Modi and Choksi left the country a few weeks before the fraud came to light.
Industrialist Vijay Mallya, who has been recognised as a wilful defaulter with outstanding loans of Rs 8,191 crore to public sector banks as on December 31, 2016, has also left the country.