In News:

• The Enforcement Directorate (ED) has sought permission from a special court in Bengaluru to declare the US-based founder and CEO of the now liquidated firm Devas Multimedia Private Limited a fugitive economic offender.

What’s in Today’s Article:

• Fugitive Economic Offender – About, process of declaring FEO, Other Indian laws dealing with economic offences, need for FEO Act etc.
• News Summary

Fugitive Economic Offender (FEO)

• An FEO is defined by The Fugitive Economic Offenders (FEO) Act, 2018.
• As per the act, a person is declared as a fugitive economic offender if:
  • an arrest warrant has been issued against him for any specified offences where the value involved is over Rs 100 crore, and
  • he has left the country and refuses to return to face prosecution.
• The Act aims to provide for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts.

Process of declaring a person as FEO:

• To declare a person an FEO, an application is to be filed in a Special Court (designated under the Prevention of Money-Laundering Act, 2002).
• The Special Court will require the person to appear at a specified place at least six weeks from issue of notice.
• Proceedings will be terminated if the person appears.

What happens if a person is declared FEO?

• Upon declaration as an FEO, properties of a person may be confiscated and vested in the central government, free of encumbrances (rights and claims in the property).
• Further, the FEO or any company associated with him may be barred from filing or defending civil claims.

Other laws dealing with economic offences

• Economic offences relate to fraud, counterfeiting, money-laundering, tax evasion, etc.
• Among the laws available for prosecuting these offences are:
  • The Prevention of Money-Laundering Act (PMLA), 2002,
  • The Benami Properties Transactions Act, 1988, and
  • The Companies Act, 2013.
• Besides the above laws, sections of The Indian Penal Code, 1860 and The Code of Criminal Procedure, 1973, also cover offences such as forgery and cheating.

Need for separate FEO Act

• It was observed that existing civil and criminal laws did not contain specific provisions to deal with such offenders who evades the process of law in India by staying outside the jurisdiction of Indian courts.
• Also, it was argued that procedures under the existing laws were time-consuming, led to roadblocks in investigation and impacted the financial health of banks.
• Hence, it was felt necessary to enact a law which deals with these aspects.

Background

• Devas-Antrix deal
  • Antrix Corporation — the commercial arm of the ISRO – and Devas Multimedia Pvt Ltd signed an agreement in January 2005.
  • Under the deal, ISRO would lease to Devas two communication satellites (GSAT-6 and 6A) for 12 years for Rs 167 crore.
  • Devas would provide multimedia services to mobile platforms in India using S-band transponders on the satellites, with ISRO leasing 70 MHz of S-band spectrum.
• Cancellation of deal
  • The deal was annulled by the then government in February 2011, following a Cabinet Committee on Security decision.
    • The committee decided to terminate the agreement to use the S-band for security purposes.
    • Also, there were allegations that the Devas deal involved the handing over of communication spectrum valued at nearly Rs 2 lakh crore for a pittance.
  • In 2014, the CBI was asked to investigate the 2005 deal.
  • Later, The ED filed a chargesheet in 2018 under the Prevention of Money Laundering Act against a former managing director of Antrix and five Devas officials.
    • It stated that Devas transferred 85% of its Rs 579 crore foreign funding to the US under various claims.

News Summary

• The ED has filed an application before a special court seeking to declare US-based CEO R Viswanathan of Devas Multimedia a fugitive economic offender.
  • ED is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
  • ED enforces the following laws:
    • Foreign Exchange Management Act,1999 (FEMA)
    • Prevention of Money Laundering Act, 2002 (PMLA).
• Vishwanathan is accused of laundering a major part of Rs 579 crore the firm had brought as FDI when it had signed a satellite deal with Isro’s arm Antrix.
  • The deal was later cancelled after allegations of manipulation surfaced.