|
Business
New code can plug loopholes
|
The existing legal framework has not been sufficient to bring about the desirable changes in the regulation and punishment of economic crimes, say C. R. L. Narasimhan and Oommen A. Ninan.
|
THE COMMITTEE on Criminal Justice Reforms (CJRC) set up by the Government conducted a three day seminar on economic crimes at the Indira Gandhi Institute of Development Research, Mumbai, between March 22 and 24. The seminar, organised in collaboration with the National University of Juridical Sciences, Kolkata, was attended by seasoned professionals in banking, finance and capital markets besides eminent jurists and senior officers of the investigating agencies.
It was held in the background of the proven inability of the existing criminal justice system to cope with the vastly changing environment, which has rendered the legal regulation of offences against property particularly daunting. Technological developments have compounded the difficulties. As Mr. N. R. Madhav Menon, CJRC member and an eminent legal teacher, put it: "Traditional concepts of theft, misappropriation and cheating are inadequate to comprehend the newer varieties of crimes. Special laws have been enacted to define new crimes outside the Indian Penal Code (IPC). Changes in procedure and evidence were introduced from time to time creating a jurisprudence different in many ways from the conventional approach to crime and criminal justice. For all that, however, the changes in the legal framework have not been sufficient to bring about the desirable changes in the regulation and punishment of economic crimes. Nor have they been able to check the frequency and intensity of such crimes.''
One important recommendation of the seminar relates to the enactment of a new "Economic Offences Code'' which will "identify, segregate, classify and consolidate'' what are called serious economic crimes now spread over 30 or more economic criminal statutes and the IPC. By bundling them into one comprehensive legislation, a new code called the Indian Economic Offences Code can have a relook at some of the grave offences and remove legal gaps as well as ambiguity in identifying and prosecuting them. The need for a central enforcement agency to investigate and prosecute specified economic crimes was voiced at the seminar.
Recent economic crimes have exposed the vulnerability of the mainline financial regulators such as the SEBI and the RBI. Even the special legislation that has created fast track procedures (special courts, confining the appellate procedures to the Supreme Court), has not lessened the delay in prosecuting the accused. It is imperative to develop and foster expertise in the newer areas in finance, accounting and so on. Investigative agencies have been hard put to identify the nature of the crime and have not exactly fared well when seen in the context of the long delays and the meagre rate of conviction in most economic crimes. (Conviction rate in certain serious crimes has been as low as 5 to 10 per cent). With growing globalisation, domestic liberalisation, the enactment of intellectual property rights and the widespread use of E-commerce, there has to be a proactive approach to tackle the "newer'' crimes. The need for regulatory agencies to work in tandem with a rejuvenated criminal justice system has never been more keenly felt. Institutional building is a must and without it criminal justice system however refined cannot by itself deliver.
Financial frauds have generally involved very large sums of money. They are perpetuated by a class of people who have considerable expertise in exploiting the system. They often command resources far in excess of what the state can muster either at the investigation or prosecution stage. Very difficult to detect in the early stages, such crimes have caused considerable loss to the financial system. Restoration of money to the affected party ought to be a top priority area but unfortunately in the present context it ranks very low in the list. The objectives of a new look criminal justice system ought to be in early detection, minimising the monetary damage to the affected institution and not allowing the guilty to enjoy his ill-gotten gains. Arun Jaitley, Minister for Law, Justice and Company affairs, who delivered the valediction felt that for economic crimes, high monetary penalties are more desirable as a punishment than jail sentences. "Whatever the accused earns through an offence must be recouped from him. Jail sentences can follow later,'' he said.
For early detection of such crimes and the subsequent prosecution of the perpetuators it is essential to improve the skills available with the investigating agencies. A suggestion has been made to have a panel of financial experts working side by side with the police. Even at the trial stage those experts should have a role. A special court to deal with these crimes should have autonomy. Another important recommendation has been to shift the burden of proof to the accused.
Rules and regulations
THE TOPIC was focussed. Most delegates had a background in crime detection and prevention or in judiciary. The absence of senior representatives from the financial regulators and the mainline financial system was felt. The effort to redefine the justice system for serious economic offences is laudable. Drawing up of an economic offences code will be an important next step. One, however, hopes that some of the pressing problems faced especially by the public sector institutions in the area are taken into account before drawing up a code.
For instance, there is no level playing field between the public and private sectors in the ways perceived aberrant behaviour of their employees is dealt with. The private sector does not have the CVC. Although not directly part of the criminal justice system, the CVC has superintendence over the CBI. Detecting, monitoring and punishing criminals are specialised activities. One wonders whether the vigilance machinery hinders or helps in the objective of checking economic crimes.
That there is a strong perception of only public sector having the monopoly over economic crimes cannot be denied. Perception apart, there is a case for looking at some provisions of the Prevention of Corruption Act in the light of spectacular changes that have come about at the workplace. An inescapable fact that rules and regulations cannot encompass each and every activity. Take the financial sector. Neither the SEBI can frame watertight insider trading prevention rules nor can anyone devise a handbook that will cover each and every type of financial derivative. It is the public sector that dominates banking and most of the insurance business and plays a major role in capital markets. Public sector employees are therefore seriously handicapped. Those who want to perform have to fight a wrong perception. Non-performance is a safer course. Ultimately the country is the loser.
Send this article to Friends by
E-Mail
Business
|
