Fugitive Economic Offenders Bill, 2018

Why in news?

The Union Cabinet has recently approved the proposal of the Ministry of Finance to introduce the Fugitive Economic Offenders Bill, 2018.

What is the need for this legislation?

There have been several instances of economic offenders fleeing the jurisdiction of Indian courts.
E.g. Vijay Mallya fled the country to avoid being arrested for economic fraud, recent Nirav Modi–PNB fraud.
The absence of such offenders from Indian courts has several adverse consequences such as -

The existing civil and criminal provisions in law are not entirely adequate to deal with the severity of the problem.
In this context, Budget 2017-18 hinted at the introduction of legislation to confiscate the assets of such absconders.
The Bill comes as an effective, expeditious and constitutionally permissible deterrent to fugitive (escaping) economic offenders.
This would also help banks and other financial institutions to achieve higher recovery from financial defaults.

What are the key provisions?

Declaration - The Bill makes provisions for a Court, 'Special Court' under the Prevention of Money-laundering Act, 2002.
A Director, appointed by the central government, will have to file an application to a Special Court.
This is to declare a person as a Fugitive Economic Offender.
Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence.
And also who has left India to avoid criminal prosecution, or being abroad and refuses to return to India to face criminal prosecution.
A scheduled offence refers to a list of economic offences contained in the Schedule to this Bill.

Features - Confiscation of the property of the fugitive economic offender resulting from the proceeds of crime.

Confiscation of other property belonging to such offender in India and abroad, including benami property.
The Act disqualifies those declared as offenders from either filing or defending a civil claim in court.

It is ensured that Courts are not over-burdened with such cases.
Thus, only those cases in which total value involved is 100 crore rupees or more are within the purview of this Bill.
Mechanisms - A special forum would be created for expeditious confiscation of the proceeds of crime, in India or abroad.

The Special court will appoint an ‘administrator’ to oversee the confiscated property.
The Administrator will manage and dispose of the confiscated property under the Act.
Remedies - The alleged Fugitive Economic Offender may return to India and submit to the appropriate jurisdictional Court.
In this case, the proceedings under the proposed Act would cease by law.
This is, provided that the offender returns in the course of the proceeding prior to the declaration.
Besides, the Court will issue a notice to the person named a ‘fugitive economic offender’.
Within 6 weeks from the date of notice, the person will have to present him/herself, failing which he/she will be declared a ‘fugitive economic offender’.
And their properties as listed in the Director’s application will be confiscated.
There is a 180-day window during which the property will remain attached, with a provision for appeal against confiscation order.
Constitutional safeguards - The necessary constitutional safeguards provided for in the Bill include:

Principle - The Bill adopts the principle of non-conviction-based asset confiscation for corruption-related cases.
Notably, it is enabled under the United Nations Convention against Corruption which India has ratified in 2011.
The convention envisages domestic laws for confiscation of property without a criminal conviction.
This applies to cases in which the offenders cannot be prosecuted for reasons of death, flight or absence.

What are the concerns?

Existing provisions - Legal provisions to confiscate the assets of offenders already exist; however inadequate.
These include the provision in the Code of Criminal Procedure for attachment of the property of ‘proclaimed offenders’.
It also includes the Acts targeting smugglers, foreign exchange offenders and traffickers in narcotics.
Concerns - Proceedings for forfeiture of property under these have been marked by shortcomings and procedural delays.
Disposal of confiscated assets had not been easy, especially at a price sufficient to recoup losses or pay off all creditors.
Also, how far will the threat of confiscation of property be a serious deterrent to the offender is highly uncertain.
Challenges - Under the present, Bill confiscation is not limited to the proceeds of crime.
It further extends to any asset owned by an offender, including benami property.
Such clauses are liable for legal challenge, especially if there are third party interests and doubts about real ownership.

Source: PIB, The Hindu