Right on the money

ED has surpassed the CBI as India’s most prominent investigating agency

919335430 Hot pursuit: An ED team raiding Nirav Modi’s office and showroom at Kala Ghoda in Mumbai in 2018, the year the agency was granted the power to confiscate assets and catch fugitives abroad | Getty Images

Move over CBI, for there is a new sheriff in town. The Enforcement Directorate (ED) has become the latest nightmare for corrupt politicians, shady tycoons, terrorists, drug-peddling celebrities, Maoist insurgents, wildlife poachers and other high-profile fugitives. The agency, which was set up in May 1956 as an enforcement unit under the department of economic affairs, has now transformed into a crime-fighting juggernaut under the department of revenue. Some of the high-profile targets in the ED’s crosshairs include businessmen such as Vijay Mallya, Nirav Modi, Mehul Choksi and Robert Vadra, and politicians like Bhupinder Singh Hooda, Ahmed Patel, P. Chidambaram, Praful Patel and D.K. Shivakumar.

Much of the ED’s transformation has taken place under director S.K. Mishra, who took charge in October 2018. An unassuming officer from the Indian Revenue Service, Mishra prefers to keep a low profile. Even a photograph of the director is not available on the ED website. Mishra works six days a week out of the ED’s modest headquarters in Lok Nayak Bhavan near Khan Market in Delhi. He oversees an organisation which has a working strength of 1,273 officers against a sanctioned strength of 2,066 officers. Only about 400 of them are investigators.

In June 2019, the ED charge-sheeted former Union minister P. Chidambaram and his son, Karti, in the INX Media money-laundering case | PTI In June 2019, the ED charge-sheeted former Union minister P. Chidambaram and his son, Karti, in the INX Media money-laundering case | PTI

Yet, the success rate of the agency is growing fast. And, so are the controversies. Recently, it had a run-in with the UK-based human rights organisation Amnesty International. Making use of certain findings from a CBI probe into Amnesty’s functioning in India, the ED conducted a detailed investigation and found that between 2013 and 2019, a private limited company called Amnesty India International had received Rs 51.72 crore from Amnesty International as “export proceeds’’ for certain services. But no services were exported by Amnesty India during this period and, therefore, the amount received was found to be in contravention of the Foreign Exchange Management Act (FEMA) and the Prevention of Money-Laundering Act (PMLA). The ED froze the organisation’s bank accounts.

Incidentally, Amnesty’s two major recent reports—on the abrogation of Article 370 and on the 2019 Delhi riots—were focused on India. The ED’s crackdown gave the Narendra Modi government ammunition to condemn certain “entities’’ funded by foreign donations for interfering in India’s domestic political debates.

Amnesty International said the charges against it were unfounded. The European Union has taken note of the ED’s action against the NGO. Nabila Massrali, EU spokesperson for foreign affairs and security policy, told THE WEEK that the EU had raised the issue with its interlocutors in India and Brussels and was hopeful that it would be resolved soon.

The ED has so far secured 18 convictions, arrested 224 persons, filed 734 prosecution complaints and is conducting trials in 640 cases. It has attached property worth Rs77,304 crore. But what enhanced the agency’s reputation the most were the three successful extraditions from the UAE—bringing back Christian James Michel, Deepak Talwar and Rajeev Saxena, who were facing charges in the AgustaWestland chopper scam. At least four more extradition requests are pending before foreign governments, including in the cases of fugitives such as Mallya, Nirav Modi, Choksi and arms dealer Sanjay Bhandari.

Robert Vadra was grilled in 2019 on cases involving purchase of assets abroad and land allotment in Rajasthan’s Bikaner district | AP Robert Vadra was grilled in 2019 on cases involving purchase of assets abroad and land allotment in Rajasthan’s Bikaner district | AP

One of the recent successes for the ED came on August 28, when it got the “fugitive economic offender tag’’ against Chetan and Nitin Sandesara, promoters of the Vadodara-based Sterling Biotech. The Sandesara siblings are accused of routing undeclared funds and causing bank loan defaults to the tune of Rs8,100 crore. The fugitive tag allows the ED to confiscate their properties to recoup the losses.

For a very long time, the CBI was the undisputed hero of police stories in India, but, over the years, its vast mandate got divided among other agencies. While the ED took up economic offences, the National Investigation Agency was set up to probe terror, hijacking and national security crimes, leaving the CBI with a diminished brief. Today, the CBI is being increasingly relegated to playing second lead to the ED, especially in high-profile cases. Moreover, opposition-ruled states like West Bengal and Andhra Pradesh are reluctant to hand over cases to the CBI.

“Sadly, the lustre and shine of the CBI has eroded under the NDA government,” said Prithviraj Chavan, who had served in the prime minister’s office from 2004 to 2010 as the minister with administrative control over the CBI. “This has happened because CBI directors are now handpicked by the government. And, by the government, I mean the prime minister,” he said. On the other hand, the ED director reports to the revenue secretary and the Union finance minister for administrative purposes. And, unlike the CBI, which cannot operate in states without the consent of the respective state governments, the ED can suo motu register cases when there is a predicate offence (a crime which is a component of a more serious crime).

ED is trying to extradite Vijay Mallya from the UK. He is wanted for fraud and money-laundering charges amounting to Rs9,000 crore | AP ED is trying to extradite Vijay Mallya from the UK. He is wanted for fraud and money-laundering charges amounting to Rs9,000 crore | AP

In March this year, the ED secured the conviction of Jharkhand minister Anosh Ekka in a money-laundering case linked to former chief minister Madhu Koda. It was a major victory for the ED when the special PMLA court gave Ekka a seven-year prison sentence for laundering Rs20.32 crore.

“PMLA was enacted in 2002, but the rules were not notified till 2005,” said M.L. Sharma, former special director of the CBI. “So it was virtually dysfunctional. Since the law was made in a hurry, it was amended six times between 2005 and 2019 when it finally became a powerful law.” Section 5 of the Act empowers the ED to attach any property which is suspected to be ‘proceeds of crime’. Upon conviction, the whole property can be confiscated and handed over to the Union government.

In June 2019, the ED charge-sheeted former Union minister P. Chidambaram and his son, Karti, in the INX Media money-laundering case and filed a supplementary charge sheet in the Manesar land scam case against former Haryana chief minister Bhupinder Singh Hooda. Speaking to THE WEEK, Hooda said the ED got its powers from the law and the agency should use it judiciously. “The CBI and the ED should work as autonomous agencies and should be fair in their investigations,” he said.

Yet another advantage the ED has over the CBI is that a statement made by an accused before the ED is admissible in court. A statement recorded by the CBI or the police has no value in court. In June, when the Covid-19 pandemic was at its peak, masked ED sleuths landed at the Delhi residence of senior Congress leader Ahmed Patel to record his statement in a case involving the Sandesara brothers as the Covid protocol mandated people above 65 to not step out of their homes. The Covid concession did not apply to Patel’s son and son-in-law, who had to visit the ED office to give their statements.

“The ED is making hay while the sun shines,’’ said senior Supreme Court lawyer K.T.S. Tulsi. He said PMLA was being misused and that many of its provisions were facing legal scrutiny. “A glaring example is section 45 which makes bail impossible for an accused in a money-laundering case,” said Tulsi. “This has been quashed by the Supreme Court. The courts are working only on urgent matters because of Covid-19, but the moment the Supreme Court applies its mind to the issue, we will see many more provisions being struck down.” In his view, the problem is more about the government misusing the provisions. “This law was available to other governments also, but it was not misused. But today, the ED has become larger than the CBI,” he said.

Vadra, who is the husband of Congress general secretary Priyanka Gandhi, was grilled extensively by the ED in February and June 2019 on cases involving purchase of alleged illegal assets abroad and land allotment in Rajasthan’s Bikaner district. Chidambaram was not so lucky as he had to spend 40 days in Tihar jail. Another senior Congress leader Shivakumar, too, had to go to jail after the ED arrested him in an alleged tax evasion and hawala transaction case.

On October 5, the CBI conducted simultaneous raids at multiple locations linked to Shivakumar and registered a case on allegations of possession of disproportionate assets worth Rs74.93 crore. CBI officials confirmed that it was ED sleuths probing money-laundering charges against Shivakumar who found that he could also have violated the provisions of the Prevention of Corruption Act.

Congress leader D.K. Shivakumar had to go to jail after the ED arrested him in an alleged tax evasion and hawala transaction case | PTI Congress leader D.K. Shivakumar had to go to jail after the ED arrested him in an alleged tax evasion and hawala transaction case | PTI

The ED has stolen a march over the CBI in the Hathras rape case as well. After Rajeshwar Singh, the agency’s joint director in charge of the Lucknow zone, found that one of the accused in the case was already under its scanner, the agency sought more details from the Uttar Pradesh Police to track the source of funding for the protests in Hathras. The ED has found that a website calling for violent demonstrations to protest the Hathras rape has also been linked to other violent agitations, especially in Kashmir. “A preliminary inquiry is going on and more information cannot be divulged at this stage,” Rajeshwar Singh told THE WEEK.

Shantonu Sen, who was joint director of the CBI, however, said the ED still had a long way to go. “The CBI was prone to misuse, but compared with the ED, it had some checks and balances. While the CBI sleuths maintain a case diary during an investigation following the Code of Criminal Procedure, the ED does not follow such procedures,” said Sen. But ED sleuths said they kept a record of their investigations.

ED sources said all state police forces were required to share with it monthly reports of all FIRs. A dedicated division in the ED would sift through those FIRs and pick up money-laundering offences. For example, in money-laundering offences related to drug trafficking, the ED would pick up cases where a certain minimum amount of narcotics was involved. It would also look at corruption cases where Rs10 crore or more was involved, except in the case of political corruption. That was how the ED registered a case under PMLA after the death of actor Sushant Singh Rajput, because the Bihar Police had registered an FIR on the basis of a complaint filed by Sushant’s father, K.K. Singh. He had accused Sushant’s girlfriend, actor Rhea Chakraborty, of siphoning off Rs15 crore from his son’s accounts.

With the technological expertise of its cyber unit, the ED has accessed relevant WhatsApp chats, revealing details about narcotics consumption and the role of several celebrities, who are now being questioned by the Narcotics Control Bureau. “Our inquiries are based on the data provided by the ED,” said an NCB official.

In June, ED sleuths landed at Ahmed Patel’s Delhi residence to record his statement in a case involving the Sandesara brothers | Getty Images In June, ED sleuths landed at Ahmed Patel’s Delhi residence to record his statement in a case involving the Sandesara brothers | Getty Images

The ED works on most cases with a bare minimum number of officers. In its Ballard Estate office in Mumbai, there are just about 30 investigators. While the CBI had assigned nearly 40 officers to probe the Nirav Modi case, the ED put only three or four officers on the case. “Nearly 80 petitions are filed daily in different courts by various vested interests to dislodge the case,” said an ED officer about the Nirav Modi case. “Two dedicated officers reply to each petition, get stay orders on bail applications and continue to investigate the case,’’ said the officer. Litigations are a major headache for the ED as high-profile accused quickly approach courts for anticipatory bail and also employ other diversionary tactics.

“Our attempt is to file the prosecution complaint within a year and not drag the matter once we summon an accused in a particular case,” said an ED officer. ED sleuths prefer keeping fewer key witnesses in their cases in order to focus on important matters at hand and avoid endless court hearings. “Fewer key witnesses mean quicker trials and convictions. Moreover, if a case is not proved, we will not shy away from filing a closure report,” said the officer.

ED sleuths do not undergo police training at world-class academies, but they have a high-value property in Delhi, confiscated in a money-laundering case, which is being used as a training centre. About two-thirds of the officers on deputation to the ED are from the customs department, while one-third are from the income tax department. The ED has its own cadre where qualified candidates join as assistant enforcement officers, who rise in the hierarchy to become joint directors. The agency is in dire need of a headquarters, a training centre, housing facilities and its own offices across the country. A former officer recalled how he had to take an accused with him on a scooter once, all the while worrying that he might get off and run away at a traffic signal.

With the passage of the Fugitive Economic Offenders Act in 2018, the ED now has the power to confiscate assets and catch fugitives abroad. The first such confiscation, worth Rs1,350 crore, happened in the Nirav Modi case, and it posed a huge challenge for the agency. “We had to bring back over 2,300kg of polished diamonds and pearls from the UAE and Hong Kong. We had never done this before and there was no precedent available with any other agency,” said an ED officer.

The consignments were stored in the warehouse of a logistics company in Hong Kong and were transported by an air cargo service. ED officials were constantly monitoring the shipment to ensure that nothing went missing.

ED has named Ratul Puri, nephew of Kamal Nath, in a charge-sheet linked to the AgustaWestland scam | PTI ED has named Ratul Puri, nephew of Kamal Nath, in a charge-sheet linked to the AgustaWestland scam | PTI

When investigations began in the Kerala gold smuggling case to find out how the proceeds of smuggling were used and whether funds were diverted for terror activities, the ED’s experience came in handy. The ED may not be a police organisation, but it has tightened the noose around cross-border terror financiers in Jammu and Kashmir and has cracked down on extortion rackets run by Maoist commanders in Bihar and Jharkhand.

The agency has a secret special task force which looks into terror financing and the smuggling of drugs and liquor. The force has enabled the agency to attach the proceeds of crime of Pakistani terror mastermind Hafiz Mohammed Saeed, Syed Salahuddin of the Hizbul Mujahideen, controversial televangelist Zakir Naik and designated global terrorist Dawood Ibrahim’s aide Iqbal Mirchi among others. The STF was successful in proving foreign exchange rules violations against Kashmiri separatist leader Yasin Malik and former Hurriyat leader Syed Ali Shah Geelani.

The ED is also active in targeting wildlife poachers by tracking down illicit money generated through the sale of animal parts. Recently, it has started cracking down on companies that run Chinese online betting applications. Mishra is, in fact, an old China hand as he used to work on Sino-Indian border management in the home ministry before joining the ED. In August, an ED team raided 15 locations in Delhi, Gurugram, Mumbai and Pune and found that Chinese nationals had floated multiple companies in India to run online betting apps and that payment instructions were coming from China. It arrested a Chinese national and three Indians and froze Rs46.9 crore in four HSBC bank accounts.

The ED will have a key role to play when the global terrorist financing watchdog Financial Action Task Force (FATF) reviews India’s anti-money laundering regime next year. The agency’s actions in India and abroad will determine how the country has performed in curbing the menace of money-laundering and the underlying criminal activity. The last FATF review was held in 2011.

ED registered a case after Rhea Chakraborty was accused of siphoning off 015 crore from Sushant Singh Rajput’s accounts | AFP ED registered a case after Rhea Chakraborty was accused of siphoning off 015 crore from Sushant Singh Rajput’s accounts | AFP

Among the ED’s most successful and most controversial missions so far have been the extradition of Saxena, Talwar and British national Michel in the AgustaWestland case. While Michel was deported from Dubai in December 2018, Saxena and Talwar were sent back by the emirate a month later. The case is politically sensitive with the ED claiming that Michel had disclosed the names of senior Congress leaders as recipients of kickbacks in the chopper deal. But the latest CBI charge sheet, which was filed on September 20, has not named any politician.

Michel’s lawyer Aljo K. Joseph said it was a classic case of the government using its premier investigating agencies for political vendetta. “In the CBI charge sheet, none of the political names widely discussed by the media have been included,” Joseph said. “This means that the investigating agencies have been used by the BJP to target its political adversaries without proof.” He also pointed out that Michel was being held in Tihar jail without bail.

ED sources said the probe had become deeper with the sixth charge sheet naming Ratul Puri, nephew of former Madhya Pradesh chief minister Kamal Nath, in a money-laundering case linked to the AgustaWestland scam. “We are hoping to fill the missing links,” said an investigator.

A major challenge for the ED involves the extradition of Mallya from the UK. The former Kingfisher Airlines boss is wanted for fraud and money-laundering charges amounting to Rs9,000 crore. The Indian case for Mallya’s extradition received a big boost with the ED’s findings on money-laundering. Chief Magistrate of England Emma Arbuthnot accepted the ED’s submissions and cleared Mallya’s extradition after noting that the case was not politically motivated. Arbuthnot’s order came at a time when the CBI, which was pursuing Mallya, was facing a credibility crisis because of the bitter internal feud between the agency’s then director Alok Verma and special director Rakesh Asthana, who was heading the probe against Mallya. “The extradition was granted after we could establish how blatantly money was laundered,” said an ED officer.

The only challenge remaining in the case is to deal with Mallya’s efforts to get political asylum in the UK. If his request is denied, Mallya may be brought back to India, most likely within a year. And, the Ballard Estate office of the ED is preparing to take custody of its prized catch. Those who know the ED director well say he rarely smiles, but if the agency succeeds in bringing Mallya back, he can most certainly afford a hearty laugh.