Did Modi govt just ‘strengthen ED’s hand’? Order on sharing info with more agencies sparks fears

Earlier this month, Union govt added 15 more to list of institutions with which ED may share case-related information. These include NIA, MEA, CVC & National Intelligence Grid.

Representational image of Enforcement Directorate office | Twitter/@ANI

New Delhi: Days after a notification issued by the Modi government under the Prevention of Money Laundering Act (PMLA) 2002 allowed the Enforcement Directorate (ED) to share information with 15 more agencies, some experts have expressed fears of misuse of the law by the ED and questioned the rationale behind the move.

While some feel the PMLA notification will bring more accountability in the workings of the government, a section of legal experts has warned that it does not address key legal issues, and that it could open the door for the involvement of covert services, several of which have been flagged in the past for operating without appropriate statutory basis.

Members of opposition parties have in recent months repeatedly accused the ED of being a tool in the hands of the ruling BJP. According to senior advocate Vikas Pahwa, through the notification, “the government has strengthened the hands of the ED”.

The 22 November notification amended a 2006 notification to add 15 more names to the list of institutions with which the ED may share information regarding cases. The list includes the National Technical Research Organisation (NTRO), the National Investigation Agency (NIA), Military Intelligence, the Competition Commission of India (CCI), the Serious Fraud Investigation Office (SFIO), the Ministry of External Affairs, the Director General of Foreign Trade, the National Intelligence Grid, the Central Vigilance Commission, the Wildlife Crime Control Bureau, and the State Police Divisions.

The notification has been issued under section 66(1)(ii) of the PMLA, which allows the ED to share information with any other authority notified by the central government, in “public interest”.

Prior to this, the list of organisations with which the ED could share case-related information included the Economic Offences Wing of the Central Bureau of Investigation (CBI), the Reserve Bank of India (RBI), the Director, Financial Intelligence Unit, under the Ministry of Finance’s Department of Revenue, the Department of Company Affairs, and the Securities and Exchange Board of India (SEBI).

‘Strengthened ED’

The latest notification was issued in light of a July Supreme Court judgment, which upheld the wide investigative powers of the ED and the restrictive bail conditions under the PMLA, but ruled that a money laundering case cannot be continued unless a scheduled offence was committed, explained advocate Pahwa.

In other words, the court ruled that if a competent forum concludes that a scheduled offence has not taken place, then proceedings under the PMLA related to property derived or obtained from that offence can no longer be continued.

The PMLA lists these separate offences and laws in its schedule, and these are called scheduled offences or predicate offences. In simpler words, therefore, at least two cases run usually parallelly, one under the scheduled offences section, and another under PMLA, for money laundering.

Complaints under PMLA are filed by the ED to probe allegations of money laundering, which — according to the PMLA and its interpretations in court — is the act of converting money earned from illegal activities, or “proceeds of crime”, into clean money. These proceeds, therefore, have to be linked to a separate criminal offence allegedly committed by the person, based on which the ED files its independent complaint under PMLA.

“Before this judgment, the ED used to argue in court that money laundering is a standalone offence, and that even if a scheduled offence does not exist, we can still proceed further. However, the Supreme Court said that they can’t (do this),” said Pahwa.

He added: “Now ED knows that they are dependent on other agencies. Earlier they thought they were the boss of a money laundering case. Now their survival is subject to the investigation by the other authorities.”

The government has now directed the ED to share information with these other authorities, so that those authorities can also enquire and see whether a scheduled offence has taken place, he explained.

“Now there is an automatic sharing of information to make sure that if X offence is not made out, then Y is, if Y is not made out, then Z is. At least some offence would be made out. The government has strengthened the hands of the ED by compelling them to share information with these other agencies, knowing that PMLA proceedings are subject to the proceedings of the predicate offence,” claimed Pahwa.

A former high court judge explained that the notification concerned the “doctrine of cooperation” by sharing details between agencies.

According to him, sections 2 and 5 of the PMLA allow registration of a PMLA case if any complaint is received, or a report or charge sheet under Section 173 of the Code of Criminal Procedure (CrPc) has been filed for the scheduled offence. However, the second proviso of section 5 allows orders of attachment of property or arrest of a person without any such complaint or report, in cases of emergencies. This includes a situation where the authorities fear that the person may run away with the proceeds of crime.

“Under those circumstances, written reasoned orders are to be passed. However, it has been noticed that this provision is misused, and is used routinely, instead of in emergencies,” he said.

The former judge explained that sharing of information between agencies would allow continued misuse of this provision, since arrests could be made or properties could be attached on the basis of information received by the agency.

“If any information or any documents are shared with other agencies, those agencies can register the complaint, ignoring whether any matter is pending under a scheduled offence or not. The main reason is that no FIR or charge sheet is needed (to arrest someone or attach property),” he added.

‘Unclear rationale’

Senior Congress MP and lawyer Manish Tewari also raised several questions on the rationale behind the notification, and said that he has tabled a Parliament question asking the government to explain this notification.

Last year, Tewari had introduced a private member’s Bill which aimed to “regulate the manner of the functioning and exercise of the powers of intelligence agencies within and beyond the territory of India”. With a focus on surveillance measures, the Bill called for setting up of tribunals and committees for better control and oversight of such agencies, and for addressing surveillance-related complaints from individuals.

Among other things, the Bill also sought to prevent officials of agencies including the Research and Analysis Wing (RAW), Intelligence Bureau (IB) and NTRO from entering into any property, or interfering with any form of communication, without a warrant from a designated officer.

In 2011, he had moved another private member’s Bill called the Intelligence Services (Powers and Regulation) Bill, that sought to bring “appropriate statutory basis” for intelligence agencies. This Bill had pointed out that intelligence agencies such as RAW and NTRO are “operating without an appropriate statutory basis delineating their functioning and operations”.

‘Will bring accountability’

A few experts also welcomed the move as a “positive sign”, and even saw it as bringing in more accountability in the functioning of various agencies.

Senior advocate Vijay Aggarwal called it a “step in the right direction”, explaining, “All the important agencies should work in tandem, not like the seven blind men and elephant, that touch the leg and call it a pillar or touch the tail and call it a rope.”

He added: “Of course, they should work in close coordination with each other, as it is their job to not only do the postmortem, but also to prevent any wrongdoing in the interest of the country. So sharing information is very important.”

Former special director general of NIA and former director general of the Bureau of Police Research and Development N R Wasan believes that such information was being shared earlier as well, but it was “off the record”. He told ThePrint that making it official is a step in the right direction, “as the Intelligence may need such information in the interest of national security”.

“This is a positive sign…If you’re making it (sharing information) on record, at least there is beginning of some accountability. Hope some steps would be taken to bring in place some mechanism for accountability of intelligence agencies also,” he added.

(Edited by Poulomi Banerjee)