In a bid to tighten the noose around fugitives like diamond merchant Nirav Modi and Vijay Mallya, the Cabinet today approved the Fugitive Economic Offenders Bill that provides for confiscating all assets of absconding fraudsters and loan defaulters.
The proposed law aims to impound and sell assets of Nirav Modi-type escapees with a view to quickly recover dues.
Fugitive Economic Offenders Bill 2018 has been brought to confiscation of assets of a fugitive, including Benami assets. There will also be the provision to confiscate those assets outside India but co-operation of that country will be needed: FM Arun Jaitely
Fugitive Economic Offenders Bill 2018 has been brought to confiscation of assets of a fugitive, including Benami assets. There will also be the provision to confiscate those assets outside India but co-operation of that country will be needed: FM Arun Jaitely pic.twitter.com/eDl88ByTT9
— ANI (@ANI) March 1, 2018
Addressing a press conference, Jaitley said that a person fleeing the country to avoid criminal prosecution will be seen as a fugitive offender. If the person fails to respond to the government in six weeks, a special court under the money laundering Act, will declare him or her a fugitive. Jaitley further said that cases allegedly involving a total value of above Rs 100 crore will be subjected to prosecution.
Elaborating on the consequences for the offender, Jaitley said, “It will lead to confiscation of all assets in India. And if there are benami assets, then even those will be included. There will also be a provision to confiscate those assets outside India but co-operation of that country will be needed.”
Jaitley said that the bill would soon be introduced in the Parliament. “The Act provides for constitution of the NFRA. There will be a chairperson and appropriate members in the authority. The authority has a provision that will specify the cases that will fall under it.”
NFRA will act as an independent regulator for the the auditing profession which was one of the key changes brought in by the Companies Act, 2013: Finance Minister Arun Jaitley pic.twitter.com/mKQQqYROn4
— ANI (@ANI) March 1, 2018
Finance Minister Arun Jaitley said the Bill, which will be taken to Parliament for approval in the second half of the Budget session beginning from 5th of March, defines a fugitive offender as someone against whom a court has issued an arrest warrant for a scheduled offence and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face trial.
The new law is different from the Prevention of Money Laundering Act, which also provides for confiscation of assets of economic offenders, he said. Under PMLA, only profit of crime is confiscated and that too upon conviction. The new law extends to all assets irrespective of whether it is acquired as a result of a crime or not, he said.
“This is triggered by the offender being a fugitive. A trial of fugitive will never be complete,” he said, reasoning why confiscation of assets has been provided for. The new law will apply “the moment warrant is issued (and) the court decides the man is not submitting,” he added.
The law, though it was announced in the Budget for 2017-18, has been hastened after Nirav Modi and his Uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank (PNB) of Rs 12,700 crore, left the country and are refusing to cooperate with law enforcement agencies.
The new law will allow quicker recovery of dues through a special court from such absconding offenders. He said the law will apply to new and old cases of persons who have fled the country to avoid prosecution. All assets, not just proceeds of crime, will be confiscated of an offender fleeing the country, he said, adding that offender cannot pursue any civil case in the country.
The Cabinet also approved setting up of a National Financial Reporting Authority (NAFRA) to regulate erring auditors. Under the first instance, auditors of all listed companies and unlisted large companies will be covered under NAFRA.