The Union Cabinet has approved introduction of Fugitive Economic Offenders Bill, 2018 in Parliament. The bill proposed by Finance Ministry aims to curb practice of evading criminal prosecution by economic offenders who flee from country to evade clutches Indian law by remaining outside jurisdiction of Indian courts.
Fund minister Arun Jaitley said the government will try and get the Fugitive Economic Offenders Costs passed in the upcoming second half of the Budget session while details regarding the Country wideNational Financial Reporting Authority (NFRA) will be issued soon.
The Cabinet approved a stringent legislation to confiscate the assets of those who flee the country to escape being brought to account and cleared setting up of an independent regulator for auditors that is already permitted under the companies law. The decisions follow the ₹12,622-crore fraud at Punjab National Bank involving jewelers Nirav Modi, Mehul Choksi and their companies that went undetected for years, raising questions about the competency of audits at multiple levels.
The government has also been unsuccessfully seeking to get Vijay Mallya extradited from the UK for having defaulted on debts repayments of Kingfisher Airlines and being wanted for questioning over money laundering. Former cricket administrator Lalit Modi is another person the federal government has been seeking to bring back without success.
The fugitive Bill, that will apply with retrospective effect to all such persons as soon it comes into force as per the minister, will cover cases in which the total value is ₹100 crore or more to ensure less significant ones don’t overburden the special courts that will hear them.
Once passed, the legislation will give the government power to attach all the assets of a person who’s been declared a fugitive and not just those acquired from the proceeds of criminal activity. The government will also create an international cooperative mechanism later to attach even the foreign resources of those declared fugitives.
The Companies Act provides for a National Financial Reporting Authority (NFRA) under Section 132 of the law.
“The decision aims at establishment of NFRA as an unbiased regulator for the auditing profession which is one of the key changes brought in by the Companies Act, 2013,” the government said in a statement. The NFRA will have jurisdiction for investigation of chartered accountants and their firms engaged with all listed companies and large unlisted open public companies, the threshold for which will be prescribed in the rules.
“The need for establishing NFRA has arisen on account of the need felt across various jurisdictions in the world, in the wake of accounting scams, to establish independent regulators, independent from those it regulates,” the federal government said.
The federal government has been dissatisfied with the conduct of auditors. Prime Minister Narendra Modi had last year said some chartered accountants facilitated the laundering of black money after demonetization.
Fugitive Economic Offenders Bill, 2018
Implementation strategy and targets: In order to address the lacunae in the present laws and lay down procedures to deter financial offenders from evading the process of Indian regulation by remaining outside the jurisdiction of Indian courts, the Expenses is being proposed. The Costs makes provisions for a Court (‘Special Court’ under the Prevention of Money-laundering Work, 2002) to declare a person as a Fugitive Economic Offender. A Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has still left India so as to avoid criminal prosecution, or being overseas, refuses to return to India to face legal prosecution. A scheduled offence refers to a list of economic offences contained in the Schedule to this Bill. Further, in order to ensure that Courts are not over-burdened with such instances, only those situations where the total value involved in such offences is 100 crore rupees or even more, is within the purview of this Bill.