Deterring fugitives – Business Line–10.03.2018

As Indian banks’ gross NPAs nudge ₹8 lakh crore and new mega-frauds like PNB’s tumble out of the closet, there is mounting public anger against perpetrators of financial crimes who hop abroad to evade prosecution. The Government’s keenness to bring them to book through a new law — The Fugitive Economic Offenders Bill 2017 — is thus understandable. The draft law carries stringent provisions that may serve as a deterrent to fraudsters fleeing the country to escape the consequences of their crimes. But the worry is the possibility of misjudgement or misuse of the sweeping discretionary powers granted to courts and officials.
To ensure that perpetrators of specified crimes have a strong incentive to stay put, the Bill empowers officials to attach domestic properties of suspects even before a case is filed in a Special Court. The Special Court, on hearing this petition, can summarily declare suspects as ‘fugitive economic offenders’ and order confiscation of their assets to the Centre, for sale and settlement of dues. While seizure of property before producing proof is harsh no doubt, this can be overlooked on the count that this law only applies to suspects who try to leave India after an arrest warrant has been issued, that too where the offense involves ₹100 crore or more. But as the list of culpable offences ranges from possessing counterfeit Government stamps and cheating to criminal conspiracy, bribe-taking and bank fraud, it can sometimes lead to harsh penalties that are out of proportion to the crime. There are other aspects to this draft law too, which appear severe. For instance, the seizure powers apply not just to property believed to be part of the proceeds of the crime, but also to all ‘other properties’ belonging to the suspect. Once the Special Court declares a person as a fugitive, he can be debarred from filing and defending any civil claims thereafter. While this blanket ban is against the principles of natural justice, what is even harsher is barring companies from filing civil claims if their large shareholders, promoters or key managerial personnel are declared ‘fugitives’.
These provisions can wreak undeserved collateral damage on minority shareholders in a listed company, and need a rethink before the Bill becomes law.
The Bill also doesn’t address the roadblocks the existing laws face in bringing large fraudsters to book. Perpetrators of financial crimes in India manage to evade punishment under the rash of existing laws by taking cover behind extradition treaties and spiriting away personal assets abroad.
It remains to be seen whether now at least, the authorities manage to shut the cage before the chickens fly the coop.

via Deterring fugitives – Business Line

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