‘Enforcement Directorate has become like a new CBI.’
In the recent past, the Enforcement Directorate (ED) has acquired immense power and has also improved its performance.
The ED is a specialised financial investigation agency under the Department of Revenue of the Union Ministry of Finance and works under two primary mandates—Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).
On the one hand, FEMA facilitates the ED to take action against offenders under civil law as FEMA is a civil law, with officers empowered to conduct investigations into suspected contraventions of Foreign Exchange Laws and Regulations, adjudicate, and impose penalties on those adjudged to have contravened the law.
The PMLA, on the other hand, has strengthened the ED with powers under criminal law, with officers empowered to conduct investigations to trace assets derived out of the proceeds of crime, to provisionally attach/confiscate the same, and to arrest and prosecute the offenders found to be involved in money laundering.
Initially, the Enforcement Directorate could take action under above-mentioned mandates, but with the rising focus on dealing with cases of black money, the Prime Minister Narendra Modi led government at the Centre has entrusted the agency to enforce the new Fugitives Economic Offenders’ (FEO) law 2018 which gives it powers to confiscate property both within and outside India of fugitive economic offenders—whether or not the properties have been purchased from proceeds of crime. It also covers a wide array of white collar offences that can lead to an individual being classified as an economic offender.
According to Salil Sharma, a former customs official-turned-lawyer, ever since the Modi government has come to power at the Centre, the Enforcement Directorate has become like a new Central Bureau of Investigation (CBI), as the ED seems to get more headlines in national media than the CBI.
“Since its inception in 1956, when the ED was called the ‘Enforcement Unit’, to the recent past, the agency was dysfunctional with almost an abysmal record of performance, but after 2014, the Enforcement Directorate has become a super institution to take on economic offences,” Sharma said.
“Currently, the ED can summon any individual if it thinks that the person has violated the provisions of FEMA, FERA (Foreign Exchange Regulation Act) and FEO. It can also conduct a raid, adjudicate property, arrest offenders and confiscate property. Altogether, the powers of ED are unparalleled as the agency can suo motu register an FIR against the offender and start investigation,” Sharma added.
Since the past few years, the Enforcement Directorate has been at the forefront of many high-profile investigations, including the recent Rs 12,636 crore frauds at the Punjab National Bank, allegedly involving jewellers Nirav Modi and Mehul Choksi. The agency has also been probing fugitive liquor baron Vijay Mallya in the Rs 9,000 crore Kingfisher Airlines scam in August 2017.
The ED’s crackdown is not limited to individuals from the field of business; from Karti Chidambaram to Lalu Yadav, a dozen of politicians, too, have been facing the brunt of ED action.
Data suggests that the performance of the ED under the Modi regime has improved a lot. As per ED data, during the period of 2012-13, a total 212 cases were registered out of which in only 11 cases, prosecution complaints were filed, while after the change of regime at the Centre, in 2017-18, a total of 148 cases were filed out of which 103 cases reached the persecution process—that is more than 60% of the total cases filed under the PMLA.
The value of assets attached by the ED in seven years from 2005-2012 was Rs 1214.66 crore, but that has gone up to Rs 7432.04 crore in the fiscal year 2017-18.
Though the Enforcement Directorate has gained a unique stature, according to ED’s own data, the organisation is still facing a shortage of staff. The sanctioned staff capacity of the Enforcement Directorate is 2,064 while there are only 1,005 staff at present.