By Shivangi Bhatawadekar-
Money laundering refers to the process of concealing the origin of money and further passing it through a series of bank transactions.
The aim of this process is to clear the illegality of money and make it legitimate for use. There have been many cases of fraud, money laundering, siphoning and other financial crimes that have been committed in India.
Many of these financial offenders use international accounts in order to circulate the money. As the chances of disclosure of fraud get clearer, these offenders abscond from the country and take refuge in foreign countries.
Some popular money laundering cases are the Kingfisher Airlines scam, The Punjab National Bank fraud, the Lalit Modi (IPL scam) etc. One such case is the Religare Finvest Limited money laundering case.
Religare Finvest Limited:
Religare Enterprises Limited (REL) is a group offering a variety of financial services. This is done through underlying subsidiaries and operating entities.
Religare Finvest Limited (RFL) is one such subsidiary which mainly provides financial assistance to Small and Medium sized Enterprises (SMEs). It provides working capital and finance loans to people in India.
Malvinder Mohan Singh and Shivinder Mohan Singh are Indian businessmen. They were former promoters of Ranbaxy, Fortis (hospital chain) and Religare Enterprises. They are the main accused in the money laundering case of RFL.
The Money Laundering case:
In 2019, RFL’s Manpreet Suri filed a complaint in the Economic Offences Wing (EoW) of the Delhi Police, after which an FIR was filed.
The Singh brothers were arrested by the EoW for allegedly misappropriating funds of RFL. They were arrested on charges of cheating (Sec 420), criminal conspiracy (Sec 120A) and criminal breach of trust (Sec 405) of the IPC. With them Anil Saxena, Sunil Godhwani and Kavi Arora (former MDs and CFOs of the Religare group) were also arrested.
The Singh brothers have allegedly caused a loss of Rs. 2,397 crores to Religare Finvest Ltd.
When the brothers had control over RFL, they distributed loans from RFL to Lakshmi Vilas Bank (LVB). These loans were further extended from LVB to two other companies under the control of Malvinder Singh and Shivinder Singh.
All this money was siphoned off and diverted to various accounts (including foreign companies) all of which eventually culminated into the pockets of the Singh brothers. This entire fraud was allegedly carried out in 2016-17. All the payments that were due were wilfully defaulted and avoided.
Based on the facts above, the Enforcement Directorate (ED) filed a money laundering case against Malvinder Singh and Shivinder Singh. It was evident to the ED that this fraud was well-planned and executed.
The Delhi High court had granted bail to Shivinder Singh. It took a stand that “one can’t be kept in custody merely on a hunch that he may prejudice or impede trial”.
However, this order was later stayed by the Supreme Court. It stated that the status quo of the custody be remained as it is till further notice. It also stated that the High Court order should not be used as a precedent in any case.
Other cases against the brothers:
Daiichi Sankyo, a Japanese drug maker, also accused the Singh brothers of siphoning off money to various companies and foreign accounts.
He stated that funds given to a company were directed towards other companies through many complex transactions and all these assets were later shielded.
It is also alleged that the Singh brothers siphoned off money from Fortis healthcare, a hospital chain that they previously owned.
Laws against money laundering:
The Prevention of Money Laundering Act, 2002 (PML Act) is an act enacted in order to prevent money laundering and like crimes in India. The ED has been given the power to exercise the provisions of the PML Act.
Not just money laundering, but the PML Act can also be used for predicate offences of financial nature mentioned in IPC, the Arms Act, the Prevention of Corruption Act 1988, the Narcotics Drug and Psychotropic Substance Act 1985 etc.
The punishment for money laundering can be either imprisonment for 3-7 years with or without a fine. The maximum term for imprisonment is 10 years (only if the crime is related to an offence mentioned in the NDPS Act). The quantum of imprisonment term is dependent on the gravity of the offence committed.
India does not recognize money laundering as a socio-economic offence; hence courts don’t use plea bargaining for cases of money laundering.
The Fugitive Economic Offenders Act, 2018:
The Fugitive Economic Offenders Act, 2018 gives the authority to the court to confiscate the properties and assets of anyone who is a fugitive economic offender. A fugitive economic offender is one who has committed an offence mentioned in the said act, with the value of the offence being over Rs. 100 crores.
The ones who have a power to enforce the provisions of the PML Act are the ones who have been given the power to enforce this act as well. This Act was introduced in order to prevent the fugitive offenders from absconding the country in order to evade judicial trial of their alleged criminal acts.
In recent times, there have been various financial crimes committed. These crimes are revealed only after a few years. Despite the complex banking and financial systems in our country, people still find loopholes in order to illegally gain more money.
Generally, the rich and influential businessmen, who have multiple holdings under their names, easily divert and siphon off money through various accounts.
Despite the rigorous laws and regulations, these crimes continue to happen. The only solution then visible is stricter enforcement of laws. The execution of these laws must be monitored.
There must also be increased awareness regarding the legal repercussions of committing such crimes. Mere law making is not the solution. People must be dissuaded to commit such crimes.
- Petition for Special Leave to Appeal (Crl.) No(s) 3473/2020 https://images.assettype.com/barandbench/2020-07/2fce89c4-db17-4749-8c3d-c32b5f8dd01c/ED_vs_Shivinder_Singh___31_07_2020.pdf