Fugitive Economic Offenders Ordinance

Why in news?

• The President recently promulgated the Fugitive Economic Offenders Ordinance.
• Passage of Fugitive Economic Offenders Bill was delayed due to disruptions in the Parliament.
• Click here to know more on the Bill.

What are the key features?

• The ordinance seeks to confiscate properties of economic offenders who have left the country to avoid facing criminal prosecution.

• Offender - A fugitive economic offender is a person against whom an arrest warrant has been issued for committing offence like

1. counterfeiting government stamps or currency, cheque dishonour for insufficiency of funds
2. money laundering
3. transactions defrauding creditors

• A fugitive economic offender is one who has left the country to avoid facing prosecution, or refuses to return to face prosecution.

• Provisions - The provisions of the ordinance will apply for economic offenders with following conditions:

1. who refuse to return
2. persons against whom an arrest warrant has been issued for a scheduled offence
3. wilful bank loan defaulters with outstanding of over Rs.100 crore

• It provides for confiscating assets even without a conviction.
• It also provides for paying off lenders by selling off the fugitive’s properties.
• Such economic offenders will be tried under Prevention of Money Laundering Act (PMLA).

What is the procedure?

• Application - A director or deputy director, appointed under the PMLA, 2002, may file an application.
• This is to declare a person as a fugitive economic offender.
• It can be filed before a special court, designated under the 2002 Act.
• It will contain the reasons to believe that an individual is a fugitive economic offender.
• Besides, it will have information about

1. the whereabouts of the offender
2. list of properties believed to be proceeds of a crime for which confiscation is sought
3. list of benami properties or foreign properties for which confiscation is sought
4. list of persons having an interest in these properties

• Court - Upon receiving the application, the special court will issue a notice to the individual.
• It requires the person to appear at a specified place within 6 weeks.
• If the person appears at the specified place, the special court will terminate its proceedings under the provisions of the Bill.
• Property - Property belonging to the offender may provisionally be attached without the prior permission of the special court.
• This is, provided that an application is filed before the court within 30 days.
• Appeals against the orders of the special court will lie before the high court.

What are the concerns?

• A series of instances with absconding offenders has pressurised the government to take immediate action.
• They include liquor baron Vijay Mallya’s, IPL commissioner Lalit Modi, diamond merchants Nirav Modi and Mehul Choksi.
• Government agencies have attached the diamond merchant duo’s assets in India.
• But an American court has disallowed the sale of their assets in other jurisdictions.
• It's because India is yet to pass a model law mooted by the UN for cross-border insolvency cases.
• It is not clear whether this ordinance can make up for this shortfall.
• The ordinance route reflects the urgency to react to recent offences.
• But the government needs to present a coherent vision about its plans to bring back those fugitives who have already got away.
• The government has to plug many more legal loopholes in the whole system.

Source: The Hindu