Monday’s arrest of Deepak Kochhar
and his subsequent remand till September 19 was the culmination of the investigating agency lodging a case of money laundering against the Kochhars and Mr Dhoot to probe alleged irregularities and corrupt practices in sanctioning of ₹1,875-crore loans by ICICI Bank to the corporate group. The ED has also alleged that the ownership of NuPower and Supreme Energy changed hands through a complex web of shared transactions between Mr Kochhar and Mr Dhoot.
Despite the strong accusations, the Kochhars’ best hope of getting out of this mess is ED itself. It’s a massive irony, but the agency’s poor track record in convictions is the only light at the end of a rather long tunnel for the couple.
Consider the evidence: Under the Prevention of Money Laundering Act (PMLA), the agency has managed only 15 convictions in the past 14 years, which is barely one conviction every year since it got the mandate for investigations under the PMLA in 2005.
While the inordinate delays in the judiciary system is part of the problem, that alone can’t explain the abysmal track record of one of the country’s premier agencies. A large number of ED’s decisions have been struck down by the PMLA tribunal itself. The latest evidence of this was ED’s decision to attach Nirav Modi’s properties which were mortgaged/hypothecated with a consortium of banks led by ICICI Bank. Ordering release of the properties, the Tribunal in September last year slammed the ED for “inadequate investigation” into the case.
The Tribunal also termed the ED decision a “malafide afterthought and desperate attempt to improve its case” at the appellate stage. Criticising ED’s argument, the Tribunal said “reason to believe cannot be subjective satisfaction of the officer concerned. It is not an arbitrary power which can be mechanically exercised”.
Two years before that, the then revenue secretary Hasmukh Adhia had also expressed concern over the “very poor” conviction rate in money-laundering cases. ED’s job, he said, was not only to file prosecution complaints but also to improve the conviction rate drastically.
One of the valid reasons for this sorry state of affairs is of course the staff shortage at ED. The staff strength is less than half the sanctioned capacity. For example, in the money laundering case against Karnataka Congress leader D K Shivakumar, the ED law officer did not appear in the Delhi High Court to argue against his bail plea. When asked by the court, the law officer’s colleague said he was busy in a district court and would take some time, riling the judge.
But staff shortage is just one part of the problem. Given the increasing complexity of economic crimes, the quality of manpower is another serious issue. After all, decoding a money trail is the job of specialists. Also, the agency needs to improve its infrastructure capacity. ED has less than 50 offices across the country, while the Central Bureau of Investigation has more than 100 offices.
That’s surprising, considering that the Modi government has widened the ambit of ED. It has entrusted the agency to enforce the new Fugitive 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. The current government has also introduced a special incentive allowance — a long pending demand of the agency’s officials to bring them on a par with their counterparts in the Central Bureau of Investigation.
Many observers say ED has improved its performance in the recent past in terms of the variety of the cases it has started handling. But no such “variety” will inspire confidence till the conviction rate improves. Just high profile arrests, subsequent bails, and then a prolonged period of inactivity after the TV cameras switch off have become too repetitive, strengthening the chorus of witch-hunting against the agency. ED has to show more closures of the cases to prove that it means business. Till that happens, the Kochhars can live on hope.