With the President giving assent to the Fugitive Economic Offenders Bill, India has moved a step closer to bringing the likes of Millay’s and Nirav Modi to justice and make them pay for their sins. The bill empowers authorities to confiscate their properties and assets to recover the money they owe to banks and other creditors. So far so good, but there are points to ponder.
To qualify for the new law to be applied, an offender has to swindle a minimum of Rs 100 crore, the rationale of which has not been explained. If the idea is to prevent abuse of the law, it is not clear how the threshold is going to help. Having seen ‘professional grade’ fraudsters like Modis and Choksies come up with ingenious craft to cheat, one wonders whether the minimum size will provide the swindlers the scope to enact their act in installments.
It is often not the lack of laws that leads to such scams, but the abuse of the system by the conspirators with the connivance of officials that is mostly responsible. Nirav Modi’s PNB fraud went on undetected for 6 years, although the banking system has all the safeguards, including internal auditing to prevent such massive fraud.
Same is the case with uncle Mehul Choksi. Shocking details of how Choksi secured Indian clearance for his Antigua citizenship have now emerged.
The Caribbean nation has claimed that it granted citizenship to him after obtaining the all-clear signal from the Indian government. The Mumbai police explanation that there was no record of his arrest will probably save the neck of some official, but begs the question as to how unequal our system is to the challenge posed by hardened criminals like Choksi. The master cheat had left for Dubai just a few days before the CBI filed a case against him, which shows how well-uninformed he must have been.
When such huge numbers are being reeled out about the amounts involved in these scams, it does not cross our mind that the brunt of all this is borne by the common man. As the banks come under pressure, they pass on the strain to the account holders, the majority of whom are poor people who maintain these accounts because they cannot afford to be outside the formal banking system.
Latest figures coming out from the government indicate that the banks have recovered a massive Rs 5,000 crore from account holders as fine for failing to keep the required minimum balance. The banks show no mercy when it comes to such poor souls, whose balance may have dipped below the minimum requirement by a few rupees, but allow defaults worth hundreds and thousands of crores to the big fish and are often ready to write them off.