How big-ticket offenders are able to relocate, escape long arm of the law
New Delhi, Feb 4: It has been several years since high-profile economic offenders such as Vijay Mallya and Nirav Modi made headlines by fleeing the country, leaving a trail of unpaid debts amounting to thousands of crores from Indian banks.
Their departure thrust the nation into a web of financial challenges and raised poignant questions about the effectiveness of legal processes and probe agencies tracking their movement. It also triggered a broader conversation about accountability and the resilience of the financial system.
Sources say that a joint team of the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), and National Investigation Agency (NIA), is actively working to identify properties belonging to such financial fugitives in the UK and other countries.
The goal is to seize the 'proceeds of crime' acquired by these financial fraudsters.
A joint team is also working on the extradition of arms dealer Sanjay Bhandari, who fled the country in 2016 amidst investigations into multiple defence deals.
Bhandari, allegedly linked to Robert Vadra, husband of Congress General Secretary Priyanka Gandhi Vadra, is said to have acquired properties in London and Dubai, and transferred them to shell companies associated with Vadra's alleged aide.
Bhandari, Nirav Modi, and Mallya, all three declared fugitive economic offenders (FEOs) are expected to be extradited to India, but they still have pending appeals against their deportation.
The government has already attached their assets in India, with some properties sold to recover funds for outstanding bank dues.
Under the Mutual Legal Assistance Treaty (MLAT), India and the UK are obligated to share information on criminal investigations related to economic offenders.
“A three-agency team is set to hold bilateral discussions in London to facilitate the exchange of information, emphasising the importance of international cooperation,” the sources say.
While the Union Home Ministry typically handles MLAT, the Ministry of External Affairs (MEA) has taken charge due to diplomatic engagements requiring all requests to be routed through the MEA.
Meanwhile, in a recent setback for Vijay Mallya, who fled from the country on March 2, 2016, the UK High Court ruled in favour of his extradition to India, dismissing his appeal. However, Mallya's legal team has obtained permission to appeal to the UK Supreme Court, further extending the extradition process.
In March last year, the CBI submitted an additional chargesheet in a bank fraud case related to Mallya in a Mumbai court.
The chargesheet stated that while Kingfisher Airlines faced a severe cash crunch in 2008, and lenders were still attempting to recover loans defaulted in 2015-16, Mallya acquired a property valued at Rs 80 crore in the UK and another worth Rs 250 crore in France.
The CBI had said that evidence obtained from the UK, through a Letter Rogatory, indicated significant diversions to Mallya's motor-racing team, Force India Formula-1 Team Ltd (F1F1), from Kingfisher's account with HSBC Bank, London.
Information provided during the opening of Swiss bank accounts linked to Mallya in 2014-15 stated that he was neither a politician nor a member of any political party.
The chargesheet also revealed that Mallya was slated to receive $75 million ($40 million upfront and the remainder in the form of $7 million annually from 2017 to 2021) from Diageo PLC in exchange for stepping down from the position of Chairman of United Spirits Limited (USL) and refraining from competing with Diageo PLC in Asian liquor markets.
The amount constituted an asset that Mallya was obligated not to alienate, as per the terms of the personal guarantee agreement dated December 21, 2010, executed by him in favour of the lenders, including IDBI Bank, for the loans obtained by Kingfisher.
For Nirav Modi and Mehul Choksi, accused in the Punjab National Bank (PNB) scam, their legal battles have also taken an international turn.
Court hearings in Dominica have complicated Choksi's extradition proceedings, with concerns raised about Indian prison conditions causing delays.
Nirav Modi, facing charges of fraud and money laundering, in November last year told a UK court that his stay in England might extend for years due to ongoing legal proceedings.
Nirav Modi was arrested on March 19, 2019, in the UK on the basis of India's extradition request to face trial in the multi-crore bank fraud case in the country.
"After his arrest, he had filed several bail petitions which were strongly opposed and all the bail petitions were rejected by UK courts," a CBI official says.
CBI had registered a case on January 31, 2018, against the partner of three private firms and others including then officials of Punjab National Bank (PNB) on a complaint from Punjab National Bank on the allegations that Nirav Modi had hatched a criminal conspiracy amongst themselves to defraud the Punjab National Bank to the tune of Rs. 6,498 crore (approx) by fraudulently issuing Letters of Undertaking (LoUs).
During the investigation, the CBI conducted searches at 42 premises and arrested fifteen persons.
“A large number of witnesses were examined and voluminous documents were collected. Investigation revealed that the accused officials of the PNB, in conspiracy with said owners of the firms and others, had fraudulently issued a large number of LoUs to overseas banks for obtaining Buyer's credit in favour of said three firms without any sanctioned limit or cash margin and without making entries in the CBS system of the bank,” he says.
The investigation further revealed that the fraud was allegedly perpetrated despite the circulars issued by RBI.
Meanwhile, a Mumbai Magistrate's court issued a proclamation notice against Mehul Choksi in connection with a cheating case filed by the Mumbai Police's Economic Offences Wing.
Another high-profile fugitive, Lalit Modi, the man credited with transforming cricket with the Indian Premier League (IPL), found himself embroiled in financial controversies during his tenure as the league's chief commissioner.
Accused of financial irregularities and money laundering, Lalit Modi left India in 2010 and has since been in the UK.
His case brings attention to the intersection of sports and financial impropriety, exposing how influential figures can exploit positions in the world of sports for personal gain.
Experts argue that the challenges faced by Indian authorities are multifaceted, citing extradition laws, varying legal systems, and international human rights considerations as significant roadblocks.
Critics emphasised the need for a streamlined and efficient extradition process, underlining the importance of international cooperation in tackling economic offences.
Vineet Jindal, a Supreme Court lawyer says that extradition treaties alone will not fetch the desired results for India. “Extradition often involves conflicting sovereign interests. While the requesting state seeks to prosecute offenders pursuant to its sovereign power, the state where the fugitive is located has sovereign interests as well,” he says.
“These include treaty obligations, different laws, the prerogative to grant asylum, and higher standards of protection of human rights,” Jindal adds.
According to Jindal, the newly passed bill which is yet to be implemented, the Bharatiya Sanhita Bill has been legislated keeping in mind the importance of a balanced, evidence-based approach to crime prevention.
“The bill’s aims are pragmatic as it not only gives harsh penalties but also has a humanistic approach towards the offenders.This would prevent the convicts from getting asylum in foreign countries as the offenders would be given an opportunity of rehabilitation in the home country itself,” he says.
“Through this, it also synchronises with the global criminal laws, as it has the features that essentially are framed to bring restorative justice,” Jindal adds.