ED Moves Delhi HC Challenging Anticipatory Bail Granted to Chidambaram, Son in Aircel-Maxis Case or Enforcement Directorate attaches assets worth ₹109 cr of Punjab-based firm are often the headlines we see in the newspaper or the news. What is the ED or Enforcement Directorate? How different is ED from CBI? What cases is ED investigating? Is ED a caged parrot, like CBI, acting on whims of those in power?
What is Enforcement Directorate or ED
What is Money laundering?
Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. Organised crime such as smuggling, illegal arms sales, drug trafficking and prostitution rings, can generate huge amount of money. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits. The money so generated is tainted and is in the nature of `dirty money’ and needs to be legitimized.
Like a Washing machine aka(also known as) launderers clean clothes, Money laundering “cleans” illegally obtained funds of their “dirty” criminal origins, allowing them to be used within the legal economy.
How is Enforcement Directorate or ED different from CBI?
There are many investigative agencies in India such as Research and Analysis Wing(RAW), India’s external intelligence agency, the Intelligence Bureau, CBI(Central Bureau of Investigation), Narcotics Control Bureau, CID(Criminal Investigation Department) etc. The agencies which deal with money/economic offences are explained here.
CBI or Central Bureau of Investigation probes corruption, investigates high-profile crimes, economic crimes and any crime the Centre, states or the courts require it to take up. It operates under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions. CBI origins can be traced to Department of Special Police Establishment(DSPE), a Central Government Police force, which was set up in 1941 in Lahore by Government of India to investigate bribery and corruption in transactions with the War and Supply Department of India. DSPE acquired its popular current name, Central Bureau of Investigation (CBI), through a Home Ministry resolution dated 1.4.1963.
Enforcement Directorate or ED is the investigating agency for offences committed under the Prevention of Money Laundering Act (PMLA) of 2002. It also acts as per the provisions of the Foreign Exchange Management Act (FEMA) of 1999, and the Fugitive Economic Offenders Act (FEOA) of 2018. It is handling cases such as PMC Bank case, Vijay Mallya bank loan default, Infrastructure Leasing & Financial Services (IL&FS) payment default case.
ED investigates economic offences such as Money laundering. ED cannot register a case on its own. Another agency, such as the CBI or the state police, must register an offence based on which the ED can file an ECIR, (Enforcement Case Information Report), the equivalent of a police FIR.
The ED can independently receive complaints and do two rounds of probes-T1 (primary) and T2 (detailed investigation) in ED parlance-before referring the case to a predicate agency. It can take months before a predicate agency acts on the ED’s reference. Though In Dec 2016 ED informed CBI of irregularities in the INX Media case, the case was filed by CBI in May 2017 as shown in the timeline of INX case image below.
Structure of ED
Enforcement Directorate or ED works under the jurisdiction of the Union finance ministry. The Enforcement Directorate was established in the year 1956. Its Headquarters is situated at New Delhi. Enforcement Directorate has 10 Zonal offices each of which is headed by a Deputy Director and 11 sub Zonal Offices each of which is headed by an Assistant Directors. The agency directly recruits at the level of assistant enforcement director and also inducts officers from the customs, income tax and police departments.
The law gives the ED powers for criminal prosecution and to attach the assets of the accused. The amendments to the Act made in 2019 have given the ED unprecedented powers-
- it does not need an FIR to arrest an individual.
- All offences are now cognisable and non-bailable.
- Under PMLA, a statement recorded before an investigating officer is admissible in court as evidence.
ED and Politics: Is Enforcement Directorate on Witch Hunt?
In May 2013, the Supreme Court called the CBI a ‘caged parrot’, in reference to its lack of real autonomy, during the Congress-led UPA’s rule at the Centre. Is ED also like CBI?
ED and run up to Elections
The opposition claims it is in the run-up to an election that ED raises cases against politicians.
For example, with Haryana elections upcoming in Oct 2019, ED the ED filed a prosecution complaint on 26 August 2019 against former Haryana chief minister Bhupinder Singh Hooda and senior Congress leader Motilal Vora over alleged irregularities in the land allotment in Panchkula to Associated Journals Limited (owned by Congress president Sonia Gandhi and son Rahul Gandhi).
Sharad Pawar, Nationalist Congress Party (NCP) chief, has alleged a political witch-hunt ahead of the Maharashtra assembly election, scheduled on 21 October 2019, and declared that he won’t bow before the Delhi throne. ED sent the summons to chief Sharad Pawar in connection with the Rs 2,500 crore loan fraud in the Maharashtra State Cooperative Bank (MSCB). The case is based on a Mumbai police FIR registered in August 2019 on the directions of the Bombay High Court. The FIR names the bank’s directors, Sharad Pawar’s nephew and former Maharashtra deputy chief minister Ajit Pawar, and 70 former functionaries of the bank. The original complaint was lodged with the Economic Offences Wing (EOW) in 2015.
ED and Political Scores
The opposition also alleges that ED is selective in picking its targets and is not pursuing cases against leaders of the BJP or its friends with the same intensity. For example Mukul Roy, who switched to the BJP from the Trinamool Congress (TMC), and Himanta Biswa Sarma, who crossed over from the Congress. Roy and Sarma’s names have come up in the Saradha chit fund scam, but the ED is yet to question them even as it has interrogated and charge-sheeted several TMC leaders.
Regarding the arrest of P.C.Chidambaram and Dr Shiv Kumar of Karnataka some conspiracy theories suggest that the central investigative agencies are working overtime to ‘fix’ the duo for ‘humiliating’ Union home minister Amit Shah in the past. Chidambaram was Union home minister during Shah’s July 2010 arrest in the fake encounter case of Sohrabuddin Sheikh. In 2014, a CBI court acquitted Shah of all charges. Shivakumar played a key role in the Congress outsmarting the BJP twice-in 2017, during Congress treasurer Ahmed Patel’s election to the Rajya Sabha from Gujarat, and in 2018, during the formation of the Congress-Janata Dal (Secular) government in Karnataka.
Allegations that the ED was being used to settle political scores were made even during the tenure of UPA government. While former Karnataka minister G. Janardhana Reddy was charge-sheeted by the CBI in 2012 in a mining scam, a money-laundering case was registered against YSR Congress chief Jagan Mohan Reddy, who was engaged in a power tussle with the Congress in Andhra Pradesh. Cases were also filed against yoga guru Ramdev and his close aide Balakrishna. But after BJP-led government came to power at the Centre in 2014 ED closed the cases.
ED high profile investigations under UPA
Poor Conviction Record of ED
ED has an abysmal conviction record. For example, Lalit Modi and IPL money-laundering case has been going on since 2009. Of the over 2,500 cases filed since 2005 under PMLA, only 18 have ended in conviction. For List of cases that ED is investigating click here.
Probes are hampered due to lack of coordination among various agencies(CBI etc)
ED officials claim they are quite successful in collecting evidence of wrongdoing within India but find it difficult to get evidence from abroad. In the 2G case, for example, eight of the 10 countries approached for information on alleged money-laundering did not respond to the letters rogatory.
Delay in courts, is another reason for poor conviction records claims ED officials. The ED files prosecution complaints-equivalent of a police charge-sheet-in dedicated courts. The number of such courts is limited though gradually increasing. For instance, all sessions courts in Delhi are now ED courts.
Most experts say that the length of the case in courts depends on two factors-the ED’s efficiency and political intervention. So certain cases get pace, others slow down.
The courts can decide based on evidence gathered. If the case filed by the CBI or police fails in court, the ED case collapses automatically such as in the 2G spectrum scam. The CBI court acquitted the accused, hence they got a reprieve in the ED probe associated with the scam
Convictions by ED
If the ED has secured only 18 convictions in 15 years, there was also just one acquittal. Some big achievements-the agency has not lost a single case against Vijay Mallya. Nirav Modi was jailed in the UK on the basis of an ED testimony. The agency has also been dealing with multiple cases of terror financing-13 cases have been registered in recent times with ED managing convictions in two cases.
Prosecution complaints have been filed in around 689 cases-more than 450 in the past four years. Many say that spurt was due to the administrative reforms during the tenure of Karnal Singh, who introduced a policy of vigilance checks before the induction of officials into the ED. A ‘special investigation incentive’ was granted to agency sleuths on the lines of what CBI officials are given. field forensic kits, Six dedicated forensic labs across the country were made available.
Investigative Agencies of India for Economic Offences
These agencies probe economic offences in India
Central Bureau of Investigation probes corruption, the premier agency now also investigates high-profile crimes, economic crimes and any crime the Centre, states or the courts require it to take up. It comes under the personnel, public grievances and pensions ministry
Directorate of Enforcement Investigates foreign exchange violations and money-laundering.
Directorate General of Income Tax (Intelligence & Criminal Investigation): Investigates cases of tax evasion in criminal matters; is under the finance ministry
Directorate of Revenue Intelligence: Handles smuggling, narcotics and economic cases, such as the transit of fake currency; is under the finance ministry
Serious Fraud Investigation Office: Probes big corporate cases; is under the corporate affairs ministry
Economic Offences Wing Part of every state police, probes economic, cyber and intellectual property crimes
Cases Being Investigated by ED
Some of the cases the ED has been investigating are
Infrastructure Leasing & Financial Services (IL&FS) payment default case
THE CASE: IL&FS, with over Rs 91,000 crore debt and a severe liquidity crisis, defaulted on payment of interests
START OF probe: February 2019
Status: In August, the agency filed its first charge-sheet, naming former IL&FS group chairman Ravi Parthasarthy, ex-CEO Ramesh C. Bawa, former vice-chairman Hari Sankaran, former IFIN joint director Arun K. Saha, former ITNL managing director K. Ramchand and Siva Group chairman C. Sivasankaran.
THE CASE: Diamantaires Nirav Modi and Mehul Choksi, with the help of PNB officials, used fake bank guarantees worth Rs 11,000 crore to obtain loans from overseas branches of Indian banks
START OF probe: February 2018
STATUS: ED attached several assets of Modi and Choksi; Modi is in jail in the UK, Choksi is in Antigua and Barbuda; the ED is fighting for their extradition
Vijay Mallya bank loan default
THE CASE: Bank officials colluded with Kingfisher Airlines’ promoters to sanction huge loans despite an adverse internal audit report; the company owed about Rs 7,800 crore to a State Bank of India-led consortium
START OF probe: March 2016
Status: Mallya fled to the UK in 2017; The UK has recently approved his extradition, but the matter is pending with its Home Office
Saradha chit fund scam
THE CASE: An umbrella company with 200 private players, the Saradha group in West Bengal allegedly cheated more than a million investors with ponzi schemes; the scam is worth over Rs 10,000 crore
START OF probe: April 2013
Status: The ED has filed a criminal complaint against former Trinamool Congress MP Srinjoy Bose, former Union minister Matang Sinh and his estranged wife and Saradha chief Sudipta Sen, besides six others
Rose Valley chit fund case
THE CASE: The Rose Valley group allegedly floated 27 companies to run chit funds; the ED estimates Rs 17,520 crore was raised from investors, who were cheated
START OF probe: May 2014
Status: Rose Valley chairman Gautam Kundu was arrested in 2015; a charge-sheet has been filed
Lalit Modi and IPL money-laundering cases
THE CASE: Former IPL chairman Lalit Modi allegedly told some bidders how much to bid to win during the first IPL auction in 2008. The ED is also probing the transfer of Rs 253 crore to Cricket South Africa by the BCCI in 2009 for IPL season 2, allegedly without the RBI’s prior approval
START OF probe: November 2009
Status: In 2018, the ED fined the BCCI over Rs 121 crore for violating FEMA, Modi fled to London
The image below shows cases investigated by ED.
High Profile Cases being Investigated by ED
Image and Reference from IndiaToday’s article Strong Arm of the State