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Draconian Bill for Fugitive Economic Offenders: Was It Necessary?
Sucheta Dalal 06 April 2018
Public Interest
The Fugitive Economic Offenders Bill is the government’s response to the embarrassment of a string of large bank defaulters fleeing the country after duping them of several thousand crore of rupees. The proposed legislation, approved by the Cabinet, imposes a blanket ban on economic offenders contesting the seizure and sale of their assets and properties without a trial in a court. 
 
Under this law, the director of a designated agency, such as the Enforcement Directorate (ED) or the Central Bureau of Investigation (CBI) can move a plea to declare someone as an economic offender if the crime is already committed. Once the person who is proclaimed an economic offender has fled the country, his or her assets can be confiscated even before conviction in cases, so long as the offence is over Rs100 crore. An administrator will be appointed to manage and dispose of the confiscated property. The ban on contesting such action is contrary to the principles of natural justice and is bound to be challenged in court. 
 
This, essentially, means that instead of tightening supervision, empowering the Reserve Bank of India (RBI) or making public sector banks (PSB) far more accountable, the Bill will give investigation and enforcement agencies draconian powers to seize assets when it is already too late. In attempting to manage optics after the Nirav Modi-Mehul Choksi scandal, the new legislation is open to enormous misuse in the hands of enforcement agencies and politicians, but will not apply to all those who have fled already. It is in addition to several other legislations, including the much-touted Prevention of Money Laundering Act (PMLA). 
 
This new Bill is no different from the Foreign Exchange Regulation Act (FCRA) which failed to stop Indian industrialists from stashing large amounts of wealth in tax havens abroad, but has been a great tool of harassment, blackmail and control by politicians and corrupt officials.   
 
It is important to remember the infamous Hasan Ali case, in this context. Twelve years ago, Hasan Ali, a horse-breeder from Pune, was thrust into the limelight with sensational leaks from the income-tax (I-T) department claiming that he was India’s biggest economic offender. He was charged with drug dealing, arms trade and worse. He was arrested and allegedly tortured and his health destroyed. The  I-T department claimed that Hasan Ali’s income was a stupendous Rs1.10 lakh crore (Rs110,412,68,85,303) and his tax liability was over Rs34,000 crore. 
 
Nobody bothered to question how such large wealth accumulation and earning could ever have remained hidden. On 29 February 2016, the Income Tax Appellate Tribunal ruled that Hasan Ali’s income was a mere Rs10 crore and his tax liability just Rs3 crore. The  I-T department was unable to prove any of its sensational claims and documents alleging his Swiss Bank assets were all forgeries. 
 
Although Hasan Ali was jailed for four years and his life destroyed, the cases against him for money laundering (of $8 billion) are still dragging on, despite the ignominy faced by the enforcement agencies. Draconian laws do not make the government accountable in India; they only make people more vulnerable. Nobody has been held responsible for what happened to Hasan Ali; just as nobody will, eventually, be held responsible for fugitive economic offenders such as Vijay Mallya, Nirav Modi or Mehul Choksi. 
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