Table of Contents
THE CONTEXT: Recently, Delhi Chief Minister and Aam Aadmi Party (AAP) leader Arvind Kejriwal’s arrest by the Enforcement Directorate (ED) raises disturbing questions about the direction of India’s democracy and federalism. This arrest is a reminder of the dangers of misusing enforcement agencies.
WHAT IS THE ISSUE?
- Delhi Excise policy case: The Delhi Excise policy case, in which CM has been arrested, was registered by the CBI in August 2022, based on which the ED launched its money laundering probe. Several other AAP leaders are in jail under the case.
- Against rule of law: If the ED had evidence of corruption, it should have taken the case to trial on a war footing. Keeping the accused in jail, while investigators continue their expedition is against rule of law.
- Impairing democracy: When the accused are political opponents of the ruling party, the arrests is being seen as selective enforcement of the law impairing public confidence in democracy itself.
- Issue with Supreme court: The Supreme Court of India had earlier asked the ED to provide an unbroken chain of evidence showing that ill-gotten money had flowed from the liquor lobby to Mr. Sisodia. The Court had remarked that the competence of the ED lay in bringing to the fore uninterrupted proof linking an accused with the crime proceeds. Later, the Court went on to deny bail to Mr. Sisodia.
- Misuse of central agencies: It is found that democratic politics of this country can be brought to a standstill by central agencies, even as the Court and the Election Commission of India continue to consider all this as routine law enforcement. Also, this is not the first time a central agency has gone after a constitutional functionary as Hemant Soren resigned as Chief Minister of Jharkhand before his arrest by the ED.
- Political Propaganda: The pretext that the law is taking its course will not be convincing to any reasonable mind. It is not a coincidence that central agencies are arresting only Opposition leaders on charges of corruption. The political intent of the arrest of a key leader of the Opposition, and a serving Chief Minister in the run-up to the general election is controversial.
DELHI EXCISE POLICY 2021-22
- It is also known as the new liquor policy and was implemented on November 17, 2021.
- It changed how liquor was sold in the city with the government withdrawing from the business and allowing only private operators to run liquor shops to improve customer experience and stop black marketing.
- However, after the whole controversy around the new excise policy, Delhi reverted to the old excise regime.
Allegations made in the report
- Before the implementation, the policy had first to be examined by the Chief Secretary (CS) of Delhi. The CS allegedly found procedural lapses and irregularities in the new policy.
- In the report, Delhi Deputy CM Sisodia, who heads the excise department, was accused of making changes to the excise policy without the approval of the L-G.
- This report was referred to the CBI, and which led to the arrest of the then Delhi Dy CM Manish Sisodia.
- Two cases, one by CBI and one on alleged money laundering being investigated by ED, have been registered in relation to the excise policy.
- The ED told a court that the alleged proceeds of crime amounted to more than Rs 292 crore, and that it was necessary to establish the modus operandi.
- It also alleged that AAP leaders received kickbacks to the tune of Rs 100 crore from a group of individuals identified as the South Group.
ENFORCEMENT DIRECTORATE (ED)
- ED is a multi-disciplinary organization mandated with investigation of offences of money laundering and violations of foreign exchange laws. It is a non-statutory body under the Department of Revenue, Ministry of Finance.
The statutory functions of the agency include enforcement of following Acts:
- The Prevention of Money Laundering Act, 2002 (PMLA): ED has been given the responsibility to enforce the provisions of the PMLA. It conducts investigation to trace the assets derived from proceeds of crime and ensures prosecution of the offenders and confiscation of the property by the Special court.
- The Foreign Exchange Management Act, 1999 (FEMA):The ED has been entrusted with the responsibility of investigating suspected violations of foreign exchange laws and regulations. Additionally, it has the authority to adjudicate cases and impose penalties on those found to have contravened these laws.
- The Fugitive Economic Offenders Act, 2018 (FEOA): Under this law, the agency is mandated to seize the properties of fugitive economic offenders who have fled from India to evade arrest.
- Sponsoring agency under COFEPOSA: Under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), the ED is empowered to sponsor cases of preventive detention regarding contraventions of FEMA.
WHAT ARE THE ISSUES RELATED TO ED?
- Misuse of Power: The office of ED has a lot of power and discretion in investigating economic crimes like money laundering, and they don’t need permission from the government to prosecute politicians or government officials. However, this power has been misused, as even minor crimes have been brought under the purview
- Lack of Transparency: There is also a lack of transparency in how the ED selects cases to investigate, and they have been known to target opposition parties.
- Malign reputation: Convictions in cases by the ED are minimal but media trials have already ruined the accused’s reputation.
- Political Bias: There have been allegations that political figures who have switched to the ruling party have been given favorable treatment by the ED. These allegations have raised concerns about potential political bias and lack of independence in the ED’s actions.
THE WAY FORWARD
- Transparency and Accountability: The central agencies need to be more transparent in its operations and accountable to the public. Regular reporting on its activities and proactive communication can help address concerns and build trust. Fighting corruption requires reforming investigations and ensuring transparency and fairness in the adjudication process.
- Strengthening Institutional Frameworks: Robust legal frameworks and independent oversight mechanisms are essential to prevent misuse of the ED and uphold its impartiality. The agency can be made an autonomous body to enhance its independence and improve the ED’s image as a reputed agency against economic offenses in our country.
- Collaborative Approach: Fostering a spirit of cooperation and dialogue between the Centre and states is crucial to addressing concerns about federal overreach and building trust in the system.
- Judicial Intervention: The judiciary can play a crucial role in upholding federalism and ensuring due process in ED investigations. Clear guidelines and principles established by the courts can help prevent misuse of the agency.
- Expert Committee Formation: An expert committee comprising legal, constitutional, and administrative experts can be formed to provide recommendations on resolving the issue. This committee should thoroughly analyze the legal and administrative aspects and propose practical solutions that uphold democratic principles.
- Respect for Constitutional Principles: Throughout the resolution process, it is vital for all stakeholders to demonstrate a commitment for upholding constitutional principles, including democratic governance, separation of powers, and the rights of elected representatives.
THE CONCLUSION:
The recent ED-state tussle and arrest of chief minister of Delhi is a complex issue to deal with. However, there is a need to maintain the delicate balance of power between the central government and the elected government of Delhi. Respecting the constitutional framework will provide a solid foundation for resolving the issue in a fair and transparent manner.
UPSC PREVIOUS YEAR QUESTIONS
Q.1 Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (2021)
Q.2 Resorting to ordinances has always raised concern on violation of the spirit of separation of powers doctrine. While noting the rationales justifying the power to promulgate ordinances, analyze whether the decision of the Supreme Court on the issue have further facilitated resorting to this power. Should the power to promulgate the ordinances be repealed? (2015)
MAINS PRACTICE QUESTION
Q.1 Enforcement Directorate (ED) has been criticized for targeting political opponents of the government. How can the agency effectively investigate financial crimes across states while respecting the constitutional provisions?
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