Cabinet approves Fugitive Economic Offenders Bill 2018

New Delhi: Aiming to tighten the noose around fugitive fraudsters like diamond merchant Nirav Modi, the Union Cabinet on Thursday approved the Fugitive Economic Offenders Bill that provides for confiscating all assets of absconding culprits involved in loan defaults or with an outstanding of over Rs 100 crore.

The proposed law aims to impound and sell assets of Nirav Modi-type escapees with a view to quickly recover the dues through special courts. It will apply to new and all old cases of persons who have fled the country to avoid prosecution.

The Cabinet also approved setting up of a National Financial Reporting Authority (Nafra) to regulate erring auditors of all listed companies and unlisted large companies.

Briefing the media after the Cabinet meeting, finance minister Arun Jaitley said the bill, which will be taken to Parliament for approval in the second half of the Budget session beginning March 5, 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 the 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 crime or not, he said. “This is triggered by the offender being a fugitive,” he said.

“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” himself before law, he added.

The proposed law, though it was announced in the Budget for 2017-18, has been hastened after Mr Modi and his uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank (PNB) of '12,700 crore before leaving the country and refusing to cooperate with the law enforcement agencies. The new law will allow quicker recovery of dues through a special court.

“In the last Budget, there was an announcement that the government will bring a law to confiscate assets of fugitives under economic offences. That has been approved by (the) Cabinet today,” Mr Jaitley said.

A fugitive offender’s all assets, not just proceeds of crime, will be confiscated, he said, adding that the offender cannot pursue any civil claim in the country. Assets overseas will also be liable for confiscation but it will depend on cooperation of countries where these assets are present.