PNB fraud: You can run but you can’t hide: New law to make it tough for corporate fugitives – The Economic Times

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There’s bad news for those who have fled the country leaving banks with a stack of bad loans. The Centre now plans to bring in a law that aims to help confiscate assets of high-value economic offenders absconding from India till they submit to the jurisdiction of the appropriate legal forum.

The bill is currently in public domain for feedback and suggestions.
As per the draft law, a ‘fugitive economic offender’ means any individual against whom a warrant for arrest in relation to an economic offence has been issued and the person has left the country and refuses to return to India to face criminal prosecution. The provisions of the proposed bill will override other legislations dealing with economic offences. The law, according to some reports, may be taken up in the second half the Budget session that is slotted from March 6.

“It is widely felt that the spectre of high-value economic offenders absconding from India to defy the legal process seriously undermines the rule of law in India,” the finance ministry noted in an earlier statement, adding that it was felt necessary to provide “an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed.”

The law proposes that the burden of proof for establishing that an individual is a fugitive economic offender will be on the authorities. “The confiscation order of the Special Court will, to the extent possible, identify the property that constitutes proceeds of crime which are to be confiscated and in case such properties cannot be identified, quantify the value of the proceeds of crime,” it said.

The proposed law follows an announcement made by finance minister Arun Jaitley in his Budget speech on February 1 where he had noted in the recent past that there have been instances of big time offenders, including economic offenders, fleeing the country to escape the reach of law. “We have to ensure that the law is allowed to take its own course,” he had said.

That’s not all, in further crackdown on promoters of defaulting companies, the government also plans to restrict their foreign travel and scrutinise abnormal increase in overseas transactions, said two people aware of the development.

The enforcement wing of the Reserve Bank of India and the Financial Intelligence Unit (FIU) will be roped in to implement these measures.

RBI, as the authority on capital flows in the country, is privy to information on the outward remittances of both individuals and Indian companies. The banking regulator’s enforcement team will be responsible for flagging unusual transactions and alert the authorities, the people said. Investigative agencies including the FIU may be roped in to look out for changes in the business patterns of defaulting companies.

Nirav Modi , said to be behind the Rs 11,300 crore Punjab National Bank financial fraud, is presently believed to be in the US. “Since it is suspected that many promoters with the help of bankers have managed to withdraw money and then ship it outside India through hawala or informal channels, it is important to nip it in the bud,” a person aware of the matter had told ET in an earlier report.

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