Government cracks down on financial fraud, approves Fugitive Economic Offenders Bill

Government cracks down on financial fraud, approves Fugitive Economic Offenders Bill

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.

While explaining why confiscation of assets has been provided for, Jaitley said, "A trial of fugitive will never be complete". The new law will apply "the moment the warrant is issued (and) the court decides the man is not submitting".

The Union Law ministry had approved the bill in September previous year, after which it was tabled in the Winter Session of Parliament.

In September, the Union Law ministry had approved the finance ministry's draft of Fugitive Economic Offenders Bill, 2017, and its passage into law is now being expedited as part of the Modi government's response to the PNB scam.

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The Bill also proposes setting up of a "Special Court" under the Prevention of Money Laundering Act, which will declare a person a "fugitive economic offender".

Under the Law, the offender will be "disentitled" from bringing forward or defending any civil claim.

A wide array of economic offences, including those contained in the Indian Penal Code, the Prevention of Corruption Act, the SEBI Act and the Companies Act, among others, are covered under the Bill.

In the last budget, there was an announcement that the government bring law to confiscate assets of fugitives under economic offenses. It will apply to new and all old cases of persons who have fled the country to avoid prosecution.

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The country's second-largest state-owned lender, Punjab National Bank, recently reported fraudulent transactions of about Rs 11,400 crore at its mid corporate branch in Mumbai, and said "based on these transactions, other banks appear to have advanced money to these customers overseas".

He said that all their assets, not just the proceeds of crime, would be confiscated and they would be prevented from pursuing civil cases in the country. That has been approved by cabinet today.

He added that under the proposed law the accused will be given a chance to state their case in the high court. "Jurisdiction of NFRA for investigation of chartered accountants and their firms under section 132 of the act would extend to listed companies and large unlisted public companies, the thresholds for which shall be provided in the rules".

The Bill was cleared by the Law Ministry with recommendations on reconciliation of provisions with the existing laws.

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Investigators have also arrested 13 people, including some high-ranking bank officials, for their alleged involvement in the fraud.

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