I tremble for my country when I reflect that God is just, that his justice cannot sleep forever
– Thomas Jefferson
Fiscal scams that have taken place in India have left the economy teetering at times with public trust in the law enforcement agencies reaching an abysmal low. The CBI has already been termed as a caged parrot. The local police in almost every state have invited public ire for being at the beck and call of the powers-that-be.
The Enforcement Directorate (ED) has had a dubious record of initiating cases that rarely reach its logical conclusion. The conviction rate has been in single digits. However, with the recent extradition of Tahawwur Rana from the US for being one of the masterminds of the 26x11 attacks in Mumbai and the arrest of Mehul Choksi in Belgium by the authorities, the soft power of India is palpable.
The external affairs ministry and the attendant authorities have been working overtime to ensure that the noose tightens and the ones who have escaped the frontiers of this country are brought to book and face trial here. Extraditions have never been easy and just as it took 17 long years to get Tahawwur Rana, it will be some time before we actually see Mehul Choksi, Nirav Modi and Vijay Mallya here. Even if Choksi pleads that he should be deported to Antigua where he is a citizen, it won’t be difficult to get him from there (despite India not having a treaty with Antigua) because, once deported from Belgium, it will become embarrassing for Antigua to shield him. India has ratified treaties with major countries in the world and, with the comity of nations (absent a treaty), it should be fairly easy, as no country ever likes to convey an impression to the international community that it is harbouring a notorious criminal. The world has become too small for big crime-lords to hide – especially economic offenders.
Suffice it to say that India is making the right noises at the appropriate fora and, coupled with the prime ministerial visits, the future seems to be bright. PM Modi, in his first meeting with the UK Prime Minister Keir Starmer on the sidelines of G20 summit, has stressed upon the extradition of Vijay Mallya and Nirav Modi. It may be satisfying that the victims of Mallya have been recompensed but his facing a trial here is equally important to meet the ends of justice.
Two new Indian consulates in Belfast and Manchester will enhance the people-to-people ties but will not be able to replicate what the Mutual Legal Assistance Treaty can achieve by legally mandating sharing of information on criminal investigations. The recompense process cannot be complete until ‘overseas properties’ of the fugitives are identified and processed to repay the ones who have been cheated.
Extradition has three main requisites: a legally binding agreement like a treaty; prima facie evidence that the individual has committed a crime; and dual criminality (that the act committed is a crime both in the requesting state and the requested state).
The ED is responsible primarily for enforcing two laws – one, the Prevention of Money Laundering Act 2002 (PMLA) and, second, the Foreign Exchange Management Act 1999 (FEMA). It also has powers under the Fugitive Economic Offenders Act, 2018 (FEOA). The PMLA has been at the forefront, with the Enforcement Directorate under the scanner for often being the muted tool of the ruling dispensation initiating fake cases. Be that as it may, it has prioritised restitution for the hapless victims, thereby infusing the much-needed funds back into the household or the economy as the case may be. The money laundering scams run into thousands of crores so one can only imagine the amount that completely vanished for some time before it slowly trudged back into the economy – hopefully most of it.
Extradition has three main requisites: a legally binding agreement like a treaty; prima facie evidence that the individual has committed a crime; and dual criminality
One of the cardinal principles of jurisprudence – especially in contract law and tort law – is the Latin phrase restitutio in integrum, which implies the restoration of a party back to the state they were in before being a prey to a particular event where an injury was occurred. The principle’s objective is to remedy a harm or injury caused by a wrongful act/s placing the injured party back into the position they would have been in had the wrongful act never occurred.
Recently, the ED has intensified various cases involving illegal overseas wealth and has successfully attached assets of those working against the law of the land. A number of high-profile cases has led to investigation and subsequent prosecution such as the 2G Spectrum, Augusta Westland, Nirav Modi scam and many more.
For reasons both good and bad, the ED has been increasingly in the news and in the eyes of public opinion, especially so in the last five years. It is pertinent to note here that, as a country, India identifies only a few serious or grave laws and cases to be covered under anti-money laundering offences. The ED, therefore, invests its time only if the economic offence is serious. It stays busy with cases where public money is at stake and these are the cases that always hit the headlines. In India, earlier, restitution took place only after the trial was over but a 2015 amendment ironed out that crease. The assets were returned to legitimate victims after a Special Court was set up to deal with such cases.
The ED has worked actively in prioritising restitution and identifying victims, who are legitimate claimants of money laundering offenses. Some notable examples of ED’s work in restitution in the recent past are:
• The Vijay Mallya case (R14,131.6 crore restored), in which the entire amount from attached properties have been successfully restored to the public sector banks;
• The Nirav Modi case (Rs1,052.58 crore restored), where properties have been restored to public and private banks;
• SRS group (Rs20.15 crore), where the Appellate Tribunal (PMLA) has granted permission for restituting 78 flats worth more than R20 crore to home-buyers of SRS group’s PearlCity and Prime projects in Gurugram;
• Surya Pharmaceutical Ltd (Rs185.13 crore restored to the consortium of lending banks through the official liquidator under Section 8(7) of the PMLA); and
• Mehul Choksi & others (Rs2,565.90 crore restored), in which the ED and the banks have filed a joint application before the Special PMLA Court, Mumbai, which has passed an order dated 10 September 2024, stating that the ED would facilitate the banks and liquidators in various Gitanjali group of companies would value and eventually auction the seized properties worth Rs2,565 crore, pursuant to which the sale proceeds would be deposited in the PNB/ICICI Bank as FDs.
On identification of the proceeds of crime (as described above), the ED would attach both movable and immovable properties. While land, houses and office buildings are easier immovable properties, tracking movables like luxury cars, jewellery, rare artifacts, cash held in bank accounts under fictitious names or names of relatives, or offshore accounts is a bit difficult. Benami transactions creating fraudulent ownerships like in Nirav Modi’s case, where the flats abroad were purchased in the name of wife and sister are more complex to sift out.
Co-ordination with various authorities, including courts and banks, assists in expediting the procedure to track and monetise the assets, which are then deposited in banks, eventually to release the money lost to those who have legitimate claims. Nirav Modi who has been in prison in London for nearly six years, having been refused bail seven times, after losing his extradition battle to face fraud and money laundering charges in India, still remains in remand pending the result of a confidential process, which is unlikely to end soon. This process perhaps pertains to his asylum and is likely to go on until 2026.
Courts across the globe have, for the most part, emphasised that economic crimes are far more serious than crimes committed against individuals because economic crimes injure and tarnish the economic and social fabric of the society. Hence, globally such crimes are dealt with differently, with extremely severe punishment meted out to the offenders. ED has the authority to attach property in any illicit money laundering scams, even if the property is held abroad. This process, however, is complex because it often demands and entails navigating across different legal jurisdictions and the ED often finds it challenging in terms of law enforcement and compliance. But, for the moment, given some pleasant developments, one sanguinely hopes that the ED under the FEOA coupled with some serious diplomatic efforts brings the fugitives back and ‘extradition’ becomes the new tradition.