New law for bad loan recovery is good, but India must also step up its extradition efforts

This newspaper reported yesterday about a new proposal by the Finance Ministry called the ‘Fugitive Economic Offenders’ Bill, which will allow the Government’s various agencies to not only seize but also dispose off the assets of economic offenders even before a court deliberates on the case. This because the Government was apparently discovering that several economic offenders, found guilty of cheating banks and other individuals of their dues, would flee India but still employ a fleet of lawyers to protect their properties and assets in the country. And even though banks, the tax authorities and others could eventually win the case, assets would have almost been rusted to the ground. This is exactly what happened to Vijay Mallya’s private jet, whose hulk is still rotting away on a remote tarmac at the Mumbai Airport. By the time the Airbus jet’s case wound through the courts, when it was seized by the Service Tax authorities, it had missed periodic maintenance schedules and despite being a relative young jet, it is doubtful that the aircraft is presently in a flyaway condition. As a result, the potential selling price of the aircraft is below the value that the Service Tax Department thinks it is. A similar fate awaits the tens of cars that have been impounded or attached by the authorities. A few years in a garage without being turned over would almost certainly reduce even Nirav Modi’s five crore Rolls-Royce Phantom to a rusting hulk which no-one would want to buy.

The Ministry wants to make clear through this Bill is that, anyone who escapes prosecution by fleeing the country, is liable to have their assets sold even before the cases go to court. Some of these individuals like Vijay Mallya, who fled to the UK, are fighting extradition on flimsy ‘human rights’ grounds like many other corrupt criminals who have taken shelter in the UK and other countries. Some have even acquired other nations passports with their ill-gotten gains to hide their travels. Almost always, those who flee prosecution for these cases,  are implicating themselves by their action of escaping the law. In that sense, those who have stayed on in India to fight their cases are also effectively protecting their assets.

However, despite this new law, most of these fugitives would have allegedly made off with much more than they leave behind. They would also hide their assets through banking havens and possibly even crypto-currency which they believe is beyond the reach of the Indian authorities. Action by various governments on banking havens and even crypto-currency, some European nations have confiscated Bitcoin belonging to mafia organisations would that money accessible even to India, the government should work double-time to ensure that extradition proceedings are conducted rapidly and these criminals are brought back to face not just the people they cheated including their employees but also face justice. Mallya for example is living on a weekly allowance of 18,000 pounds (`15 lakh) and driving around in a Rolls Royce with a vanity plate VJM1. Nirav Modi is apparently hiding in a fancy estate in Belgium. This is just not on and the Bill while good should not become the end-game.