This Blog is written By Mr. C. Naveen Kumar Student of School of Excellence in Law, Tamilnadu.
Abstract
An economy that does not consider the well-being of all will not serve the purposes of peace
and growth of well-being among the people of all nations. India is an
exclusive democratic country. The economic policies withhold the Industrial,
Trade, Monetary, Fiscal aspect for a country. No law in our country states the
economic offenders or the offense constituted by them. The type of offenses
takes place in the International boundaries as well. Most of the acts executed
only within the jurisdiction of the country. The social damage
caused by economic crimes is mostly invisible and may be victimless. In G-20 9(Buenos Aires) (Nov 30,
2018), India suggested nine points on the economic offenders on an
international platform.
This article will discuss the Economic
offense, the offenders, and the social damage caused by them. This paper also
includes international conventions regarding economic offense. This
paper is solely based on the perspective to canvass the economic offense
beforehand.
Introduction
India is one
of the biggest growing economies in the world[1]. We are
recognized as a developing country from the date of our independence until now.
Many governments were introduced and many economic policies had developed our
economy constantly. At present, our government’s aim is to enter the 5 trillion
dollar economy[2].
But to achieve this we should develop our economic policies strong and at the
same time, it should not violate the basic rights of the people. This is
challenged constantly by the high rate of economic offense in India[3].
This slows down our economy and even affects people's money in large,
particularly in the banking and financial institutions were affected by these
types of crimes by the unethical businessmen, which weakens banking and
financial institutions consequently affect the Indian economy. To overcome
this, many laws and ordinances were passed by the Indian government. For
example, fugitive economic offenders act, 2018.[4] This is
an important move by the government to bring these economic offenders in the
eyes of law. This article will examine the laws and flaws which deals with the
economic offenders in India and even the international protocols and agreements
to prevent these types of offense globally.
Transfiguration of civil into criminal
The Indian legal system changes its view on economic
offenses and implies majorly the criminal proceedings. This makes the rule of
law more effective in controlling and regulating the offenses. For example, a
recent amendment on the companies' act 2013, for the violation of CSR[5]
norms will attract 3 years imprisonment on the defaulting authorities. This way
of penalizing the economic civil offenses will harden the way of development in
the economy[6].
But this evolution of law has been considered significant by the government to
uphold the rule of law in the country. This leads us to provide the economic
offenses a separate category of a criminal offense. The economic offense is a wide
subject that covers all types of financial offenses to crimes like
bribery, corruption, embezzlement by any individuals, companies, institutions,
or even the government servants.
Economic offense- social damage
Economic offense in a country not only affects its
democratic institutions but also affects its economy and cuts down the
resources to the government to perform. The high rate of economic offenses can
also lead to the breakdown of the economy. Hence, it is considered to be a
serious crime and regarded considerable social damage. The social damage
caused by economic crimes is mostly invisible and may be victims less. This
constitutes the reason why special effects to be made to enforce the law over
them.
Economic offense – meaning
There is no defined meaning for economic offenses in
India, however, some offense identified and grouped as an economic offense. But
it does not have a separate law to handle especially for this separate category
of offense. Indian penal code, Income tax act, prevention of corruption act,
companies act, banking regulation act, fugitive economic offenders act, etc.
these are some of the important acts which deal with the economic offenses in
India. But these laws were also limited to their jurisdiction within India. The
economic offense was also committed by any person who may be a foreign national
or abscond to foreign countries. These law fails to bring them into the rule of
law. This shows the need for sound international laws and international
agreements between countries.
Status of fugitive economic offenders
According to the External affairs ministry, 28
persons have been identified as fugitive economic offenders absconding from
India[7].
Sec 2(f), the fugitive economic offenders, act 2018 explains the status who can
be called “fugitive economic offender”[8]. Sec
2(m)[9]
covers 55 different types of economic offenses and the specified offenses
should be over Rs.100 crore[10].
After these elements were satisfied and the status of fugitive economic
offenders was given. The central government will confiscate the property owned
by the fugitive economic offender it includes the Benami property of the
offender in and outside India. There will be no delay in confiscating
properties in India but confiscating properties abroad will require
international cooperation and agreements between the countries. The fugitive
economic offender will also lose the qualification for accessing the Indian
civil judicial system.
International actions by India
The high rate of economic offenders’ forces India to
take action in International boundaries. India addresses the issue of fugitive
economic offenders in many international organizations and institutions. The
India and South African governments also resolved to work together including
through international organizations and institutions like G20, Financial action
Taskforce (FATF), and others[11].
In G-20 9(Buenos Aires) (Nov 30, 2018). India suggested nine points against
fugitive economic offenses and asset recovery in the international platform.
These nine points were enforcing the international corporations for the
economic offenders which were considered as a threat to the international
economy. The nine points suggest the G-20 countries for strong cooperation’s,
joint mechanisms, implementation of UNCAC[12]and
UNOTC[13],
use of FATF to exchange information and to formulate a standard definition, use
of the G-20 forum to locate the properties of economic offenders[14].
India’s Sherpa (Suresh Prabhu) to the G20 submit also mentions and suggested
these nine points[15].
India also addressed this issue in the BRICS meet in brazil by mention,
economic offenders a “serious threat”[16]. The
BRICS submit also recognized it and released a joint statement recognizing the
need to strengthen the international mechanism to combat the fugitives economic
offenders[17].
Conclusion
The world's largest democratic country struggles to uphold its rule of law on economic offenders.
The central bureau of investigation (CBI) reported there were 51 economic
offenders relating to 66 cases in India who have been fled to other countries.
CBI also reported that a total of Rs17,947.11( approximately) crore were
involved and defrauded by these cases[18]. The Indian government also tries its best to bring them before the light of
justice. But, it involves an international legal system that complicates the
proceedings of the cases. The jurisdiction plays a major role in the fugitive
economic offenses. The Indian legal system had enacted many laws that will
govern this type of offense and even a more specific act named fugitive
economic offenders act (FEO), 2018 were also passed. All these laws were lacked
in the concept of jurisdiction as it applies only within India. Apart from the
jurisdiction, the FCO, 2018 applies only to the case which involves more than
Rs 100 crore. This makes the law more inappropriate to perform in full-fledged
to handle all sizes of economic offenses. Clause 4 of the FCO, 2018 gives power
to the investigative authorities to inter the accused person's house without
any court warrant and witness. It creates a chance to frame up the evidence or
raises uncertainty in the investigation. This violates the principle of
natural justice which is accepted in all foreign jurisprudence. This makes the
way to fail in the proceedings actions by India in foreign countries. Countries
like the UK are the signatory of ECHR[19]. if
the UK court feels a person to be extradited is likely to face torture or
violation of natural justice. it may deny the extradition of that person to the
requesting country. The best way to fight against the economic offenders is to
accept “Prevention is better than cure” motto to make a flawless
governing system on the process of financial systems and prevention of
absconding from the country.
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