Enforcement Directorate: India

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This is a collection of articles archived for the excellence of their content.


Court judgements

Do not summon officials, seek information: HC/ 2023

Sureshkumar, Nov 28, 2023: The Times of India

CHENNAI: The Madras HC questioned on Monday the rationale behind the ED issuing summonses to five district collectors of Tamil Nadu in the illegal sand mining case instead of just seeking the information required of these senior IAS officers.

"If you (ED) needed information, you could have asked for it," the division bench of Justices S S Sundar and Sunder Mohan said.

The court will decide petitions filed by Tamil Nadu and five collectors challenging the summonses. The ED had issued notices to 10 district collectors.Pointing out that the central agency had commenced its probe into the sand mining case based on four FIRs registered by the state government, the court said, "You are asking for details of all mining sites in all districts. How can you do that? You are entitled to ask for details pertaining to only those four FIRs.”

The court was informed that the total sale value of illegally mined sand in the past two years was Rs 4,730 crore, as against the recorded revenue of Rs 36.45 crore.

This is less than 1% of the actual revenue generated from illicit sand mining, said additional solicitor general A R L Sundaresan, representing the ED. On the government's contention that the ED has surpassed its jurisdiction as illegal sand mining is not a scheduled offence under the PMLA, Sundaresan said the FIRs mention other offences under the Prevention of Corruption Act and IPC (cheating and murder), all of which are scheduled offences.

Not responding to a query is no ground for arrest: SC

Amit Anand Choudhary, Oct 5, 2023: The Times of India

The Supreme Court has ruled that the Enforcement Directorate (ED) cannot arrest someone under the Prevention of Money Laundering Act (PMLA) simply for not responding to their queries and summons. The court directed the ED to act within the boundaries of the law and with utmost integrity. The bench stated that the failure to respond to ED's questions does not automatically justify an arrest under Section 19 of the PMLA. The court also criticized the ED for its handling of the case and emphasized the need for transparency and fairness in its actions.

NEW DELHI: Directing the Enforcement Directorate to act within the four corners of law and with utmost probity, the Supreme Court has held that the agency cannot arrest a person under the Prevention of Money Laundering Act (PMLA), just for not responding to its queries and summons.

A bench of Justices A S Bopanna and Sanjay Kumar strongly objected over the way in which ED arrested Pankaj Bansal and Basant Bansal, two directors of a real estate firm, and ruled that the agency would now onwards have to provide the ground of arrest in writing to an accused while taking him in custody.

"We may also note that the failure of the appellants to respond to the questions put to them by ED would not be sufficient in itself for the investigating officer to opine that they were liable to be arrested under Section 19 (of PMLA), as that provision specifically requires him to find reason to believe that they were guilty of an offence under the Act. Mere non-cooperation of a witness in response to the summons issued under Section 50 of the Act would not be enough to render him/her liable to be arrested under Section 19," the bench said.

Section 19 of the Act authorises ED officers to arrest a person who is considered to be guilty of money laundering and says that arrest can be made if there is sufficient reason to believe that such an offence has been committed. Section 50 empowers ED officer to issue summons, production of documents and to give evidence.

The bench said ED did not produce any record that Pankaj Bansal was evasive in providing relevant information which was one of the grounds to arrest him.

"In any event, it is not open to ED to expect an admission of guilt from the person summoned for interrogation and assert that anything short of such admission would be an 'evasive reply'. In Santosh S/o Dwarkadas Fafat vs. State of Maharashtra , this court noted that custodial interrogation is not for the purpose of 'confession' as the right against self-incrimination is provided by Article 20(3) of the Constitution. It was held that merely because an accused did not confess, it cannot be said that he was not co-operating with the investigation," the bench said.

The court said chronology of the events leading to arrest reflects rather poorly on ED functioning as the agency lodged second ECIR against the Bansals mmediately after they secured anticipatory bail in relation to the first ECIR and then summoned them on one pretext and arresting them on another.

"Being a premier investigating agency, charged with the onerous responsibility of curbing the debilitating economic offence of money laundering in our country, every action of ED in the course of such exercise is expected to be transparent, above board and conforming to pristine standards of fair play in action. ED, mantled with far-reaching powers under the stringent Act of 2002, is not expected to be vindictive in its conduct and must be seen to be acting with utmost probity and with the highest degree of dispassion and fairness," it said.


Money laundering only: HC/ 2023

January 26, 2023: The Times of India

New Delhi : The Delhi high court has held that the Enforcement Directorate (ED) does not have the powers to investigate any offence other than money laundering and the agency cannot assume by itself that a predicate offence has been committed.

“It becomes pertinent to observe that the ED stands empowered under the PMLA to try offences relating to money laundering. It neither stands conferred the authority nor the jurisdiction to investigate or to inquire into an offence other than that which stands comprised in Section 3 (of the PMLA),” single bench of Justice Yashwant Varma said in a judgment.

Mentioning apex court directions, the bench said, “The Supreme Court had pertinently observed that even if the ED in the course of its investigation and inquiry into an offence of money laundering were to come across material which would otherwise constitute a scheduled offence, it could furnish the requisite information to the authorities otherwise authorized by law to investigate those allegations and consider whether they would constitute the commission of a predicate offence. ”

The court held that the primary function to investigate and try offences listed as scheduled offences in the PMLA vests in authorities constituted under those independent statutes. 
“ED cannot possibly arrogate unto itself the power to investigate or inquire into the alleged commission of those offences. In any case, it cannot, on its own motion, proceed on the surmise that a particular set of facts evidence the commission of a scheduled offence and based on that opinion initiate action under the PMLA,” the judgment said.

The court added that it would be evident from a perusal of the Schedule that it enlists offences defined and created under various statutes, which independently contemplate investigation and trial.

Personnel issues

2017: operates at 44% of approved strength

Pradeep Thakur, ED probing scams with 44% strength, December 10, 2017: The Times of India

Sanctioned strength and its vacancy position for manpower in Enforcement Directorate-supervisory level, investigating officers, legal staff, all posts
From: Pradeep Thakur, ED probing scams with 44% strength, December 10, 2017: The Times of India

The ED is facing an acute manpower crunch as it continues to operate at 44% of its approved strength, impacting critical operations at the investigating officers’ level, which has as many as 319 posts vacant.

A recent note prepared by the agency and shared with the Central Vigilance Commission and the government shows that, against an approved strength of 2,064, the agency currently has a working strength of only 864.

The shortage of officers is higher at the critical level of deputy directors, assistant directors and enforcement officers, who are also the investigating officers (IOs) in all Foreign Exchange Management Act (FEMA) and Prevention of Money Laundeing Act (PMLA) cases.

At this level, the agency is operating at less than 58% of the approved strength. Out of the 750 sanctioned posts in these three categories, the current working strengthis431.

The agency has brought to the notice of the government how even at the supervisory level the strength is depleted with only 25 of 43 sanctioned posts occupied. The highest vacancy at the supervisory level is among joint directors, with only 17 of 33 sanctioned posts occupied.

The agency has said the last time the government advertised for the appointment of joint directors was in December 2016, but no selection has been made so far.

A senior officer pointed out how the monetary incentive available for investigating officers keeping them on a par withCBI and income tax officers has also been withdrawn by the government, leading to disappointment among staff who have been burdened with additional work in view of thehigh number of PMLA cases registered over the past few years.

A status report revealed that the agency had an opening balance of 4,700 FEMA cases in 2014-15. Over the past two years, it has managed to bring pendency down to1,900, disposing of allcasesfrom before 2001. Similarly, under PMLA, the agency had an opening balance of 1,300 casesin 2014-15, pending since 2006, which it managed to bring down to 445 in 2016-17.

The EDiscurrently investigating many high-profile cases, including that of fugitive tycoon Vijay Mallya, former Maharashtra deputy CM Chhagan Bhujbal, and YSR Congress chief Jagan Mohan Reddy, besides those pertaining to the stock exchange and import-export scams where shell firms were used to remit black money to the tune of crores out of India.

Seized assets

Storage of seized assets

October 15, 2018: The Times of India

Value of seized assets, 2015-17; Statewise number of immovable properties attached from 2007 to 2013
From: October 15, 2018: The Times of India

What happens to seized assets before the govt can sell them?

Assets worth a total of 4,400 crore have now been seized in the 14,000-crore PNB scam case involving fugitive jeweller Nirav Modi, but seizing the property is not the same as the bank recouping its losses as there is a long process that officials must go through before liquidating any property, which the government has to maintain in the meantime. Here’s a look at what happens to an asset after it’s seized and how long before it can be disposed of...

What is the value of assets seized by enforcement directorate?

The Enforcement Directorate (ED) seized fugitive jeweller Nirav Modi’s properties worth Rs 637 crore. That includes jewellery, luxury apartments and bank accounts. It is to be noted that many times the value of seized assets are not always what the agency claims in the first instance. In Nirav Modi’s case, the agency had claimed in February that it has seized gold and diamonds worth Rs 5,100 crore but the value turned out to be about Rs 2,000 crore. Data available for past three years suggest that in this period ED has seized assets worth Rs 18,559 crore under the provisions of Money Laundering Act (PMLA), 2002.

Who maintains the seized assets?

When property is seized, maintaining them is the investigating agency’s responsibility, if it plans to sell them later at the right price to recover money. Maintaining seized property is a problem even the government is trying to find a solution to.

When can the government sell these assets?

The assets seized can’t be sold by the investigating agency till the accused is convicted by a court. That’s not all — the process itself has delay built into it. It involves, firstly, attaching assets, which is provisional, followed by producing papers before the adjudicating authority (under the finance ministry’s revenue department), followed further by an appeal by the accused, for which he/she can take upto 150 days and that’s assuming the ruling is in ED’s favour, after which the ED takes possession of assets if the accused loses appeal in Appellate Tribunal and then wait for the accused to be convicted by the Supreme Court, after the case has gone through all the lower courts, before the ED can finally sell the assets.

Which state has the highest number of immovable property attached by ED?

Although latest data is not available, on its website ED has posted a list of 1,051 confirmed attached immovable property whose provisional attachment order were issued between 2007 and 2013. The largest number of these properties whose attachment was confirmed by relevant adjudicating authority as mentioned in the PMLA were located in Andhra Pradesh, which is followed by Maharashtra and West Bengal.



Pradeep Thakur, TNN, January 1, 2020: The Times of India

NEW DELHI: It was a hyperactive year for Enforcement Directorate in 2019 when the agency had in its custody some of the most high profile persons like former finance minister P Chidambaram, former Karnataka minister D K Shivakumar, Fortis Healthcare promoter Malvinder Singh and Religare CMD Sunil Godhwani in various cases. It also succeeded in getting three fugitives deported from Dubai -- British national Christian Michel and Dubai resident Rajiv Saxena, wanted in the AgustaWestland VVIP chopper payoffs deal, and corporate lobbyist Deepak Talwar, in the Air India money laundering case.

The agency also interrogated Bhushan Steel CMD Sanjay Singhal and Madhya Pradesh CM Kamal Nath’s nephew Ratul Puri. The agency’s ongoing money laundering cases against Robert Vadra, son-in-law of Congress president Sonia Gandhi, also moved forward. The agency has approached courts seeking cancellation of his anticipatory bail, seeking custodial interrogation. The ED has accused Vadra of links to fugitive defence dealer Sanjay Bhandari and claimed the latter, along with Rajiv Saxena, received payoffs in three defence deals — Embraer, Pilatus and AgustaWetland. In the Swiss Pilatus aircraft deal, ED alleged that kickbacks of 39,527,070 Swiss Franc (around Rs 254 crore) was transferred to Sanjay Bhandari in his Dubai accounts. The 75 aircraft Pilatus deal was signed by UPA government in 2009-10. After the AgustaWestland VVIP chopper deal, this was the second big defence contract under ED investigation.

The agency has in its investigation reports accused certain Dubai-based shell companies of having received money from Bhandari which was further used to acquire properties in London allegedly by Vadra and his front entities.

But the agency hogged headlines when it arrested Chidambaram in the INX-Media money laundering case in October, after he had already spent 55 days in CBI and judicial custody in the same case. The senior Congress leader got relief from courts after 106 days in custody. The agencies claimed that shell companies associated with his son Karti received kickbacks from INX-Media and Aircel-Maxis besides others in lieu of favours granted by Chidambaram when he was the FM.

Just before Chidambaram’s arrest, ED had in September acted against D K Shivakumar, former Karnataka minister and senior Congress leader, at the forefront of action to protect party MLAs from Gujarat from being poached by BJP. This was when senior party leader Ahmed Patel was contesting a crucial Rajya Sabha poll. The ED investigation in a case involving Sterling Biotech and alleged money laundering to the tune of Rs 10,000 crore was another important case.

Corporate lobbyist Deepak Talwar, deported from Dubai, and still in custody for almost an year, is considered an important catch for the agency which, along with the CBI, has been probing the involvement of former civil aviation minister Praful Patel and some top bureaucrats during the previous UPA regime for alleged kickbacks and money laundering.

The ED’s investigation over the last two years has revealed that Talwar had received alleged kickbacks of over Rs 370 crore disguised as consultancy fees and donation to his NGO from foreign airlines for illegally benefitting them by using his contacts with the then civil aviation minister and senior bureaucrats withdrawing Air India’s services from profitable routes.

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