Transfin.
HomeNewsGuidesReadsPodcastsVideosTech
  1. Reads
  2. Deep Dives

Vijay Mallya, Nirav Modi, Mehul Choksi and More: Who are Fugitive Economic Offenders?

Editor, TRANSFIN.
Jun 2, 2021 1:08 PM 5 min read
Editorial

Diamond jeweller and PNB scam accused Mehul Choksi recently tried to escape the Caribbean island of Antigua, where he has been living since 2018, allegedly to Cuba. He failed in doing so and was apprehended in Dominica, where lawyers and diplomats are currently sparring over whether or not he should be sent back to India.

Whether or not Choksi’s extradition will be successful remains to be seen. But judging by India’s track record in repatriating its fugitive economic offenders (FEOs), this seems like a longshot.

Who is an FEO?

As per the FEO Act of 2018, “any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who (i) has left India so as to avoid criminal prosecution; or (ii) being abroad, refuses to return to India to face criminal prosecution” is an FEO.

India has a long list of absconding economic offenders. As of February 2020, 72 Indians charged with fraud or financial irregularities were living abroad. And in the past six years, only two have been brought back to the country (Vinay Mittal and Sunny Kalra; but in the same month, match-fixing accused Sanjeev Chawla was also returned).

 

How is an Individual Declared an FEO?

Authorities file an application in a special court asking for an individual to be declared an FEO. The court may issue a notice to the accused, asking them to appear at a specified place. Failure to do so would lead to declaration of the individual as an FEO as per the Act. The confiscation of assets and properties of the individual may be ordered next.

But the reason for India’s low success rate with bringing FEOs to justice has to do with the next step in the process: extraditing the fugitives from foreign countries.

 

Extradition 101

This is the mechanism through which fugitives are apprehended from foreign states and returned to their home country. It is governed by treaties, arrangements and multinational conventions.

Given that extradition is as much a political process as it is a judicial one, it can be complicated and lengthy.

 

Extradition Treaties 101

A comprehensive treaty between two countries clearly defining the legal framework for the return of fugitives is obviously very helpful. India has bilateral extradition treaties with 47 countries and extradition "arrangements" (which are non-binding) with 11 countries (here’s the list).

There are also numerous multinational conventions that define extradition frameworks for transnational crimes such as terrorism and drug trafficking. Extradition requests can also be made to countries with whom India does not have a bilateral treaty. But such requests would be bound by local laws and geopolitical nuances.

FYI: Relatively, India has fewer extradition treaties compared to other nations. The US and UK have over 100 treaties each while China has 50. Also, India doesn't have such agreements with its neighbours like Pakistan, China, Afghanistan and Myanmar.

 

How Does Extradition Usually Work?

The extradition process begins when an investigative agency or court alerts the Ministry of External Affairs (MEA), which then alerts the foreign government concerned. The latter then begins its inquiry, which would involve investigation by designated authorities and then judicial review. If an extradition order is approved, the fugitive in question may be entitled to challenge the same in higher courts.

FYI: In recent years, the UK in particular has become a haven for billionaire Indian fugitives. This is because extradition proceedings are slow in the British isles, in addition to inadequate scrutiny and limited number of restrictions on establishing a business. 

 

What are the Challenges in Extraditing Fugitives?

Sometimes, a crime in India may not be a notified crime in the foreign state (for example, dowry harassment), which makes it difficult for foreign courts to probe the matter. That's because modern treaties tend to adhere to the so-called "dual criminality" approach wherein a fugitive can be extradited only if they are guilty of a crime in both countries.

Other times, "double jeopardy" comes into play, where the fugitive may have served a sentence for their crime in the foreign state already, so they may not be liable to be punished for the same crime again in India (think David Headley and 26/11).

A go-to point often raised by a fugitive's lawyers is threat to human rights. Western courts have often rejected extradition requests over concerns that the fugitive could be tortured or sentenced to death in their home country. When it comes to India, the poor state of its prison system is often brought up - in fact, it was a sticking point for Vijay Mallya's lawyers for a long time.

Coming to FEOs in particular, there's another reason why the extradition process is so lengthy and languid. Economic offenses are not viewed with the same urgency as, say, drug or murder charges. They are viewed as civil offenses and thus not tantamount to criminal conduct. Furthermore, they are not regarded as an immediate security threat, so there's usually no active effort to expedite things.

Then there are the diplomatic nuances involved, which make extradition a Gordian knot. The process becomes a matter of reciprocity, a quid pro quo, rather than an endeavour for justice. Think of it this way - India would have an easier task bringing back an FEO from France compared to one from Pakistan.

FYI: Remember Warren Anderson? He was the CEO of Union Carbide during the 1984 Bhopal gas tragedy. There were charges that he knew of the faulty technology and unsafe conditions that led to the deadly gas leak. He was arrested by authorities in Bhopal, but then released - reportedly under US pressure. Two decades later, India requested his extradition on criminal charges; Washington declined. Even today, despite relatively rosy bilateral relations, it'd be over-optimistic to assume that the US government would just give up an American national to be tried in a foreign court for manslaughter. (Either way, Anderson died in Florida in 2014.)

 

What Next?

Much of the extradition process depends on decisions made by courts and authorities in other countries - things India has no control over. That said, there are things the country can do to ensure an improvement in its fugitive repatriation success rate.

These include concluding more bilateral extradition treaties with more countries, updating the treaties it already has, and addressing investigational delays (currently, FEO-related offenses are investigated by an understaffed CBI).

On a broader, long-term scale, working to improve the country’s prison system (which is far from perfect) would rid the notion that repatriation to India would be akin to a human rights violation. Additionally, for India to be able to efficiently leverage diplomatic channels, it needs to build on its soft power - which brings us back to the need for progressive reforms to strengthen and grow the faltering economy.

FIN.
 

Congratulations! You've made it to the end. Looking for more takes on Business, Finance, Markets and Investing? Subscribe to TRANSFIN. E-O-D for informative and insightful daily news updates