[Editorial Analysis] Nabbing absconders: on Fugitive Economic Offenders Ordinance

• The Union Cabinet approved the promulgation of the Fugitive Economic Offenders Ordinance, 2018

Who is a Fugitive?

• A fugitive is defined as someone who has left India to avoid criminal prosecution or who is already overseas and refuses to return to face the law.

• In case of a Fugitive Economic Offender, these are people who have defaulted on loans and have fled the country.

• While presenting Budget 2017-18, the Finance Minister referred to instances of offenders fleeing the country to escape its justice system and said the government was looking at a law to confiscate the assets of such persons till they return to face the law.

=> Step by government

• In September, the Finance and Law Ministries had agreed on a draft Bill, but it was only introduced in the Lok Sabha this March, in a session that proved to be a washout.

• The government is no doubt conscious of the clamour for tough action on absconding offenders, particularly those involved in financial misdemeanours and wilful defaulters of bank loans.

• Banks have been asked to mandatorily collect passport details of those borrowing above ₹50 crore, and the passports of some wilful defaulters are being impounded too.

=> Recent Cases

• There remains great disquiet over liquor baron Vijay Mallya’s flight from the country, with his now-defunct Kingfisher Airlines having run up outstanding loans of over ₹9,000 crore from Indian banks.

• Both Mr Mallya and former Indian Premier League commissioner Lalit Modi, who faces an Enforcement Directorate probe for foreign exchange law violations, are in Britain.

• Diamond Merchants Nirav Modi, Mehul Choksi and their associates firms defrauded the country’s second largest public sector bank of over ₹12,800 crore.

• India is no closer to getting Mr Modi or Mr Mallya back to face the law, with extradition proceedings against the latter crawling through U.K. courts.

• Government agencies have attached the diamond merchant duo’s assets in India, while an American court has disallowed the sale of their assets in other jurisdictions while allowing their U.S.-based entity to offload its assets.

• The reason: India is yet to pass a model law mooted by the UN for cross-border insolvency cases.

=> Conclusion

• The government may have opted for the ordinance route to deflect the heat from these cases of fraud, but it needs to present a coherent vision about its plans to bring back those fugitives who have already got away and plug the remaining loopholes in the system.

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