From UPSC perspective, the following things are important :
Prelims level : CBI and ED
Mains level : governance and transparency
- Despite several observations made by the Supreme Court of India (SC) against the inefficient functioning of the CBI nothing has happened to improve the situation.
- The Enforcement Directorate (ED) is in the news now and often.
Central Bureau of Investigation (CBI)
- The Bureau of Investigation traces its origins to the Delhi Special Police Establishment, a Central Government Police force, which was set up in 1941 by the Government of India.
- It then aimed to investigate bribery and corruption in transactions with the War and Supply Department of India.
- It then had its headquarters in Lahore.
- After the end of the war, there was a continued need for a central governmental agency to investigate bribery and corruption by central-government employees.
- The DSPE acquired its popular current name, Central Bureau of Investigation (CBI), through a Home Ministry resolution dated in 1963.
Mandate of the CBI
- The CBI is the main investigating agency of the GoI.
- It is not a statutory body; it derives its powers from the Delhi Special Police Establishment Act, 1946.
- Its important role is to prevent corruption and maintain integrity in administration.
- It works under the supervision of the CVC (Central Vigilance Commission) in matters pertaining to the Prevention of Corruption Act, 1988.
- The CBI is also India’s official representative with the INTERPOL.
Cases to investigate
- Cases connected to infringement of economic and fiscal laws
- Crimes of a serious nature that have national and international ramifications
- Coordination with the activities of the various state police forces and anti-corruption agencies.
- It can also take up any case of public importance and investigate it
- Maintaining crime statistics and disseminating criminal information.
Notable cases cracked by CBI
- Bhanwri Devi missing case: Jat leader and former Rajasthan minister Mahipal Maderna, Congress MLA Malkhan Singh and Bhanwari’s husband Amarchand were all part of the conspiracy to abduct and eliminate Bhanwari. Bhanwari had threatened to expose Malkhan’s relationship with her at the Bishnoi mahapanchayat. Maderna, Malkhan, the three kidnappers and Sahiram along with Amarchand were arrested by the CBI.
- Noida double murder case: In May 2008, the nation was shocked with the sensational double murders in Noida. The victims were Arushi Talwar and Hemraj Banjade. Initially, there was no clarity about the motive or the perpetrator of this ghastly crime. After a lengthy investigation which spanned close to 6 years, the CBI based on circumstantial evidence established that the parents of Aarushi Talwar, Rajesh Talwar and Nupur Talwar were the perpetrators of this crime.
- The Satyam Case: B Ramalinga Raju, the disgraced chairman of Satyam Computers Services Ltd, along with 13 individuals and entities including Chintalapati Srinivasa Raju of iLabs, made Rs 2,000 crore in illegal wealth in the Satyam scam. The CBI constituted a Multi-Disciplinary Investigation Team (MDIT) to investigate the case. The team worked hard, burnt midnight oil and achieved success in a record time of 45 days when it filed its first chargesheet against the accused for offences of criminal conspiracy, cheating, forgery and falsification of accounts.
Issues with CBI
- Caged parrot: The Supreme Court has criticized the CBI by calling it a “caged parrot speaking in its master’s voice”.
- Political interference: It has often been used by the government of the day to cover up wrongdoing, keep coalition allies in line and political opponents at bay.
- Investigation delay: It has been accused of enormous delays in concluding investigations due to political inertia.
- Loss of Credibility: CBI has been criticised for its mismanagement of several cases involving prominent politicians and mishandling of several sensitive cases like Bofors scandal, Bhopal gas tragedy.
- Lack of Accountability: CBI is exempted from the provisions of the Right to Information Act, thus, lacking public accountability.
- Acute shortage of personnel: A major cause of the shortfall is the government’s sheer mismanagement of CBI’s workforce.
- Limited Powers: The powers and jurisdiction of members of the CBI for investigation are subject to the consent of the State Govt., thus limiting the extent of investigation by CBI.
- Restricted Access: Prior approval of Central Government to conduct inquiry or investigation on the employees of the Central Government is a big obstacle in combating corruption at higher levels of bureaucracy.
Why was it called caged carrot by the Supreme Court?
- Politicisation of the Central Bureau of Investigation (CBI) has been a work in progress for years.
- Corruption and Politically biased nature, This was highlighted in Supreme Court criticism for being a caged parrot speaking in its master’s voice.
- CBI has been accused of becoming ‘handmaiden’ to the party in power; as a result high profile cases are not treated seriously.
- Since CBI is run by central police officials on deputation hence chances of getting influenced by government was visible in the hope of better future postings.
Suggestions for the improvement of the functioning of the CBI under the supervision of the CVC
- One, the CVC Act should be amended, providing for a five/seven member Central Vigilance Commission, which could broadly assume the role visualised for the Lokpal. The selection process of the CVC members should be more broad based to prevent favouritism or from controversial persons being appointed.
- Two, the CVC should constitute an advisory committee of at least 11 members drawn from criminologists and forensic science experts. This will augment the professional input in its functioning. Further, to reduce the burden on the CVC, it should be given the power to go to any expert or professional to assist it in screening complaints.
- Three, the jurisdiction of CVC, which presently covers all employees of the central government and the CPSUs, should remain unchanged. There is already an administrative arrangement to delegate the vigilance administration over class II and lower formations to the ministries/departments concerned. However, if the lower formations are involved with the class I officers in a composite case, the CVC exercises a natural jurisdiction over all of them. To make this arrangement more effective, it would be important that the CVC exercises complete control over the selection, appointment and functioning of the CVOs.
- Four, the CVC should have an adequately experienced team to technically examine and assess the gravity of a complaint, which can then be assigned to the CBI for investigation or can be investigated by this team. After assessing a complaint by this broad-based CVC, there should be no need to seek prior permission from the government.
- Five, in the cases assigned to it by the CVC, the CBI should be made functionally and financially independent of the controls of any government ministry/department. The professional supervision over the investigations of the CBI should rest only with the CVC.
- Six, the manner of the appointment of the CBI Director should be broad based as in the case of the CVC members, whereas the other inductions/appointments in the CBI should be brought under the overarching supervision of the CVC.
- Seven, to achieve better synergy between anti-corruption laws and grievance handling, the laws relating to the whistle blowers and grievance redressal should be placed within the jurisdiction of the CVC.
- Eight, effective administration of anti-corruption laws at the grass roots is the key to responsible governance. The state and their anti-corruption agencies would, therefore, need to be equally insulated from the state government’s interference on similar lines.
- Need for autonomy: As long as the government of the day has the power to transfer and post officials of its choice in the CBI, the investigating agency will not enjoy autonomy and will be unable to investigate cases freely.
- Selection of director/ Officers: To ensure that the CBI is a robust, independent and credible investigation agency, there is an urgent need to work out a much more transparent mechanism for selection and induction of officers on deputation.
- Lokpal scrutiny: The Lokpal Act already calls for a three-member committee made up of the PM, the leader of the opposition and the CJI to select the director.
- Bifurcation of Cadre: CBI should be bifurcated into an Anti-Corruption Body and a National Crime Bureau.
- Develop own cadre: One of the demands that have been before Supreme Court, and in line with international best practices, is for the CBI to develop its own dedicated cadre of officers.
- Annual social audit should be carried out by ten reputed, knowledgeable persons with background of law, justice, public affairs and administration and the audit report should be placed before the parliament.
About Enforcement Directorate (ED)
- It goes back to May 1, 1956, when an ‘Enforcement Unit’ was formed in the Department of Economic Affairs.
- It then aimed for handling Exchange Control Laws violations under the Foreign Exchange Regulation Act (FERA).
- The ED today is a multi-dimensional organisation investigating economic offences under the Prevention of Money Laundering Act (PMLA), Fugitive Economic Offenders Act, Foreign Exchange Management Act and FERA.
From where does the ED get its powers?
- When proceeds of crime (property/money) are generated, the best way to save that money is by parking it somewhere, so one is not answerable to anyone in the country.
- Therefore, there was a need to control and prevent the laundering of money.
- The PMLA was brought in for this exact reason in 2002, but was enacted only in 2005.
- The objective was to prevent parking of the money outside India and to trace out the layering and the trail of money.
- So as per the Act, the ED got its power to investigate under Sections 48 (authorities under act) and 49 (appointment and powers of authorities and other officers).
At what stage does the ED step in when a crime is committed?
- Whenever any offence is registered by a local police station, which has generated proceeds of crime over and above ₹1 crore, the investigating police officer forwards the details to the ED.
- Alternately, if the offence comes under the knowledge of the Central agency, they can then call for the First Information Report (FIR) or the chargesheet if it has been filed directly by police officials.
- This will be done to find out if any laundering has taken place.
What differentiates the probe between the local police and officers of the ED?
- If a theft has been committed in a nationalised bank, the local police station will first investigate the crime.
- If it is learnt that the founder of the bank took all the money and kept it in his house, without being spent or used, then the crime is only theft and the ED won’t interfere because the amount has already been seized.
- But if the amount which has been stolen is used after four years to purchase some properties, then the ill-gotten money is brought back in the market.
- Or if the money is given to someone else to buy properties in different parts of the country, then there is ‘laundering’ of money.
- Hence the ED will need to step in and look into the layering and attachment of properties to recover the money.
- If jewellery costing ₹1 crore is stolen, police officers will investigate the theft. The ED, however, will attach assets of the accused to recover the amount of ₹1 crore.
What are the other roles and functions of the ED?
- The ED carries out search (property) and seizure (money/documents) after it has decided that the money has been laundered, under Section 16 (power of survey) and Section 17 (search and seizure) of the PMLA.
- On the basis of that, the authorities will decide if arrest is needed as per Section 19 (power of arrest).
- Under Section 50, the ED can also directly carry out search and seizure without calling the person for questioning.
- It is not necessary to summon the person first and then start with the search and seizure.
- If the person is arrested, the ED gets 60 days to file the prosecution complaint (chargesheet) as the punishment under PMLA doesn’t go beyond seven years.
- If no one is arrested and only the property is attached, then the prosecution complaint along with attachment order is to be submitted before the adjudicating authority within 60 days.
Can the ED investigate cases of money laundering retrospectively?
- If an ill-gotten property is acquired before the year 2005 (when the law was brought in) and disposed off, then there is no case under PMLA.
- But if proceeds of the crime were possessed before 2005, kept in storage, and used after 2005 by buying properties, the colour of the money is still black and the person is liable to be prosecuted under PMLA.
- Under Section 3 of PMLA, a person shall be guilty of money-laundering, if such person is found to have directly or indirectly attempted to indulge or knowingly assist a party involved in one or more of the following activities:
- Concealment; possession; acquisition; use; or projecting as untainted property; or claiming as untainted property in any manner etc.
Allegations against ED
- Huge discretions: The ED is the only Central agency in the country that does not require permission from the government to summon or prosecute politicians or government functionaries for committing economic offences like money laundering.
- Used for petty crimes: PMLA is pulled into the investigation of even “ordinary” crimes and assets of genuine victims have been attached.
- Actual purpose denigrated: PMLA was a comprehensive penal statute to counter the threat of money laundering, specifically stemming from the trade in narcotics.
- Violations of Rights: PMLA was enacted in response to India’s global commitment to combat the menace of money laundering. Instead, rights have been “cribbed, cabined and confined”.
- Functional opacity: There is also a lack of clarity about ED’s selection of cases to investigate. We often see ED raiding houses of opposition parties suddenly.
- Poor rate of conviction: We have hardly read the conclusion of cases by ED. Meantime media-trial tears off the accused person’s credibility which is the most desired intent.
- Under-trials and slower prosecution: ED has been focusing on keeping the accused in custody rather than actually proving the charges against them.
Challenges to ED
- ED being dragged to court: The petitions against the ED had the effect of slowing down the investigations, as officers have to defend themselves in court.
- Foul crying politicians: There are attempts to cover up unexplained, high-value transactions that fall within the PMLA’s ambit
- Investigation of foreign transactions: Getting information on accounts and money stashed abroad to establish a trail is the biggest challenge they face.
- The fight against corruption is intimately linked with the reform of the investigations.
- Therefore the adjudicating authorities must work in cooperation and ensure the highest standards of transparency and fairness.
- ED has been walking a tightrope to safeguard its integrity by speeding up investigations and court procedures.
- The need of the hour could be systemic fixes—and not shrill calls to throw the baby out with the bathwater.
- It is unlikely that corruption can be substantially reduced without modifying the way government agencies operate.
- It is for the nation to demand that the country’s premier investigating agencies like the CBI, income tax authorities and the ED are not used as instruments of blackmail and intimidation by the government of the day. Rather they should work with complete objectivity and in the interest of the nation.
Q. CBI and ED was called caged carrot by the Supreme Court. Do you agree with this? What issues are being faced by these premier agencies? Suggest some dynamic solutions to overcome these issues.