New Delhi: In June 2018, the chief of the Research and Analysis Wing (RAW) at the time made an unusual representation to his boss, the cabinet secretary. The RAW chief’s office had just received a show cause notice from the Enforcement Directorate (ED) for alleged money laundering using a Kolkata based television channel involved in the Sarada Scam. Officials at India’s external Intelligence agency were in a tizzy. Not only was this needless interference by another government agency, but the notice threatened to compromise what was felt could be an ongoing RAW operation. The prime minister had to step in to defuse the crisis.
The Wire has learnt that one and a half years after this, the agency issued a “technical circular” on February 13, 2020. Though the rationale for the circular was to “ensure uniformity in selection of cases” it got involved in, it did not seek to limit or restrict the ED’s ambit or activities. If anything, it actually added to the powers of the organisation’s director.
When officially asked about the rationale behind the technical circular’s provisions, the ED denied its existence. However, The Wire has reviewed a copy of the document.
The ED chief, as per the circular, becomes virtually omnipotent as he can order a probe keeping “law and order, national security, diversity of cases, cross border nature of offences, complexity of case, traceability of proceeds of crime, larger public interest etc” in mind. In effect, a large enough brief to draw anyone and anybody into their net whom the regime may be interested in.
Muscle-flexing by ED?
Consider the monetary threshold for investigating cases. The ED’s circular says the agency should mandatorily take up cases where the amount involved is Rs 1 crore in Prevention of Corruption Cases and Rs 5 lakh in other cases. But in the National Herald case, the only agency that has so far established any loss to the exchequer is the Income Tax department which has pegged the alleged loss at Rs 39.86 lakh. Since the ED is still at the stage of investigating its Enforcement Case Information Report or ECIR (equivalent to an FIR), and even a predicate or primary offence has not been made out, it is unclear whether a case of money laundering can ever be established.
In the Karti Chidambaram-Chinese visa case, the ED itself has built a case of a Rs 50 lakh bribe and initiated a probe. As per the PMLA, in cases where the amount involved is less than Rs 1 crore, bail can be granted immediately. When questioned about this case, the ED said, “Your allegations about Karti Chidambaram’s case are also not correct as it is not based on the correct interpretation of circular.”
In the INX media case – also involving the Chidambarams – the CBI chargesheet says that Rs 9.96 lakh was paid into a company owned by Karti Chidambaram called Advantage Strategic Consulting Pvt Ltd. This is way below the normal threshold for the ED to begin a probe, but in its ECIR the ED said an amount of nearly Rs 3 crore had been paid to ASCPL as an alleged bribe in 2007. Sources close to the Chidambarams say, “Karti allegedly met Indrani Mukherjee (owner of INX media and on bail for the murder of her daughter) in 2008 as per the CBI chargesheet. How could a bribe have been paid in 2007?”
Geographical boundaries for probe?
Then, while the PMLA does not distinguish between geographical boundaries within India for demarcating which cases can be taken up and which cannot, the ED has done so. In the circular, it has set a benchmark of Rs 10 crore and above in the cities of “Delhi NCR …Mumbai, Kolkata, Ahmedabad, Chennai, Bengaluru and Hyderabad and Rs 1 cr and more in rest of the cities” for starting an investigation. This perhaps explains why, after a recent raid involving a BJP MLA and his son, also a public servant, where the Karnataka Lokayukta Police seized Rs 8 crore in alleged bribes in Bengaluru, no action was taken by the ED or the CBI.
Consider investigations for drug-related offences. “Cases shall be investigated in relation to money laundering where the accused has been found in possession of drugs or psychotropic substances in quantity equal to five times of the ‘commercial quantity’(as defined in the NDPS Act)”, says the circular. For example, an accused has to be caught with 500 gm of cocaine or 5 kg of cannabis or 100 kg of ganja for the ED to swing into action.
But Rhea Chakraborty, friend of the late actor Sushant Singh Rajput, was charge sheeted by the Narcotics Control Bureau which said she “received many deliveries of marijuana” from drug peddlars. While the ED is empowered to investigate drug-related cases as per the law, going by the chargesheet filed by the NCB, there is no suggestion that she was engaged with peddling “commercial quantities” which is the ED’s benchmark as per their circular. Yet, the ED registered a case against her.
“Irrespective of the quantity involved, the Narcotics Control Bureau can file a case and the ED can come in because this is a scheduled offence under PMLA. But then the ED violated its own guidelines it set for itself as per the circular,” said a former investigative official familiar with the case. This, despite the fact that the whole logic behind issuing the 2020 circular “was to prioritise cases”, keeping the ED’s paucity of resources and staff in mind.
What a trial court said about the ED recently
The Wire decided to investigate how well the ED measures up against its own circular as well as the cornerstone of the PMLA. In the Patra Chawl case involving Shiv Sena-UBT leader Sanjay Raut, the ED received a setback from the court. While granting Raut bail in November last year in the alleged Rs 1,000 crore scam, the observations made by the judge have been the most scathing so far by any judicial officer.
“The extraordinary pace with which the ED arrests [an] accused becomes not even a snail’s pace in conducting trials,” sessions judge M.G. Deshpande said in his order. “Once the applicant files bail applications, the ED takes at least three to four weeks or more to file their reply…in every matter it is noticed that, ED takes very, very long time to reply [to] the simple applications filed by any accused.”
The judge said that in the past one decade, the ED has not completed a trial in a single case. “Is ED not accountable for such modus operandi availed by them in not beginning and concluding a single trial?”
The ED told The Wire, “As far as other cases are concerned, your allegations are incorrect. In all the cases, all actions taken by the ED have been approved by the concerned jurisdictional court from time to time. Moreover, as the questions posed by you pertain to sensitive cases and would amount to disclosing facts in pending cases where matter is sub-judice and also may pertain to disclosing investigating facts, which would not be proper. Wherever, the question regarding arrest etc. of accused have been raised in any judicial forum ED has adequately responded to the same by providing the correct information which have been accepted by the courts.
“It therefore appears that you have also not studied the applications filed by the accused in the other matters and replies filed by the ED and have posed unwarranted queries to ED. It may be so that you are being used by some persons with vested interest to propagate their biased views and also to elicit sensitive information from ED through you under the garb of investigative journalism.
“You are requested to go through the public record of the case as is available with various courts, the answers will be provided therein.”
A multi-party petition on the role of central agencies filed in the Supreme Court last month had noted candidly that “political figures who have crossed over to the government side have mysteriously been given ‘clean chits’ or have seen investigative agencies go slow in proceedings against them”.
The matters they cited included:
- Assam chief minister Himanta Biswa Sarma, a former Congress leader who has now aligned himself with the Bharatiya Janata Party and is serving as the chief minister of Assam, was alleged by the BJP to have perpetrated a water supply scam in Guwahati, involving the American construction company Louis Berger. Court documents filed in the United States by the US Department of Justice under the country’s Foreign Corrupt Practices Act alleged that the company paid bribes to secure the water supply contract in Guwahati but the recipients were not named. The BJP initially alleged that the unnamed recipients of the bribes included Himanta Biswa Sarma, and sought an investigation. However, after he changed parties, no action was taken. A CBI case was registered only after a PIL was filed in Gauhati high court but no effort has been made to obtain the names of those who were illegally paid off by the US company. The ED has shown no interest in the existence of this predicate offence.
- Shivraj Singh Chouhan, senior BJP leader and the Chief Minister of Madhya Pradesh, was given a ‘clean chit’ by the CBI in the Vyapam scam, where according to some media reports, more than 40 witnesses have died.
- Somasekhara Reddy and G. Janardhana Reddy, former Ministers in the BJP Government in Karnataka and accused in a Rs 16500 crore mining scam, were given a ‘clean chit’ by the CBI just prior to the 2018 Karnataka Legislative Assembly elections.
- Narayan Rane, presently Union Minister of Micro, Small and Media Industries, formerly Shiv Sena and then Congress, now with the ruling party, was being probed by the Enforcement Directorate in the Avighna Housing scam case, while he was still a part of the Congress party. However, after he joined the BJP and became a Union Minister, no progress has been made in the probe.
- BJP West Bengal luminary Suvendu Adhikari was named an accused by the CBI in the Narada sting case. However, after he joined the BJP in 2020, the investigation against him appears to have been dropped.
The charge of the parties was that “investigation/arrest or threat thereof by agencies of the Central Government has been weaponised as a tool to coerce a change in the political landscape of the country in favour of the ruling dispensation”. The Supreme Court said it could not issue blanket guidelines, and said “you can come to us in an individual case. Come to us with one or more cases together. Our problem is, for Supreme Court to lay down guidelines in abstract without factual basis.”
But, says lawyer and parliamentarian Kapil Sibal, “the actions of the ED in targeting states not run by the BJP are destabilising the federal structure and polity. What makes the situation all the more serious is the ED has all India jurisdiction where predicate offences are concerned. And there is an urgent need to review the (Supreme Court retired Justice A.M.) Khanwilkar judgement.”
In 2022, a Supreme Court bench headed by Justice A.M. Khanwilkar upheld a very draconian version of the PMLA, which makes bail nearly impossible and puts the burden of proof squarely on the accused.
What the ED says
It is to be noted that the ED director has been in the eye of a storm with the Supreme Court making its displeasure with the repeated extensions he has been getting very clear. The Union government went out of its way to amend the law to keep him in the job for five years. He is set to retire now only in November 2023.
In the face of criticism, the ED maintains that it has a stellar track record.
According to its website, the agency has a conviction rate of 96%, politicians comprise only 3% of all cases and search warrants were issued in 8.99% of the cases.
But, the ‘conviction rate’ is based on 24 out of 25 cases in which a PMLA trial was completed. IANS quoting finance ministry sources reports that between 2018-19 and 2021-22, cases registered by ED rose by 505%, from 195 cases in 2018-19, to 1,180 in 2021-22. The number of searches the ED conducted rose by a huge 2,555% between 2004-14 and 2014-22. As per finance ministry’s own data, 112 searches were carried out by the ED between 2004-14 resulting in attachment of proceeds of crime worth Rs 5,346 crore.
The ED gave The Wire a three-page response to its queries, but some questions regarding the role of the agency remain unanswered:
How many cases has the investigation been completed so trial can commence?
How many cases have been registered and closed by way of discharge or quashing or acquittal?
How many accused have been discharged after a complaint was filed in court?
Of the properties attached, how many have been confiscated by the ED?
“The tenor and content of your letter shows that it is based not only on incorrect and misleading facts but also shows that you have not conducted proper research including checking the website of the ED. Otherwise, you have not put certain questions relating to statistics and asked for answers from us. It is clear that the purpose of this letter is to do a roving inquiry for an oblique purpose,” the ED said.
This is the first article in a two-part series. Read the second article here.