Recently, while delivering the speech on the occasion of 19th D. P. Kohli Memorial Lecture, the Chief justice of India N. V. Ramana suggested an umbrella institution to bring various agencies like the Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and the Enforcement Directorate (ED) under one roof. CJI further suggested some measures to ensure the impartial and independent functioning of such an Institute. A subtle reading of an excerpt from the CJI’s speech provides clarity on the intent of such a proposal.
“…The Police and the investigative agencies may have de-facto legitimacy, but yet, as institutions, they still have to gain social legitimacy.
…When it comes to the CBI, it possessed immense trust of the public in its initial phase. ….But, with the passage of time, like every other institution of repute, the CBI has also come under deep public scrutiny. Its actions and inactions have often raised questions regarding its credibility.
…The need of the hour is to reclaim social legitimacy and public trust. The first step to gain the same is to break the nexus with the political executive.
…There is an immediate requirement for the creation of an independent umbrella institution, so as to bring various agencies like the CBI, SFIO, ED, etc. under one roof. This body is required to be created under a statute, clearly defining its powers, functions and jurisdictions. Such a law will also lead to much needed legislative oversight. It will also save the institution from being blamed as a tool of harassment....”
BACKGROUND
The Central Bureau of Investigation traces its roots to the Special Police Establishment (SPE). Created by an executive order of the Government of India in 1941, SPE was established under a Deputy Inspector General of Police to investigate cases of bribery and corruption in transactions concerning the War and Supply Department of the Government of India. Eventually, in 1946, Delhi Special Police Establishment Act was enacted to investigate cases of bribery and corruption by Central Government employees, covering all departments of the Govt. of India. The DSPE acquired its popular current nomenclature, Central Bureau of Investigation (CBI) on 01.04.1963. From 1965 onwards, the investigation of Economic Offences and important conventional crimes such as murders, kidnapping, terrorist crimes, etc., on a selective basis, came under the ambit of CBI.
Over the years, CBI established a reputation for itself. The Institution has been credited for its impeccable impartiality and competence, due to which, the Higher Judiciary of the country, on various occasions and on a case to case basis, has entrusted several conventional cases as well as many high profile cases, for investigation to the CBI. The CBI is designated as the National Central Bureau of India for the purposes of ICPO-INTERPOL, and is the only linkage between the INTERPOL and Indian Law Enforcement. CBI engages with other law enforcement agencies of India, and with other NCBs and Sub-Bureaus around the world, to investigate cases having global repercussions.
Similarly, on the lines of the Serious Fraud Office (SFO) in the UK, and in the backdrop of the failure of non-banking institutions and several scams plaguing the country at that time, the Government of India, in 2003, established the Serious Fraud Investigation Office (SFIO) under the Ministry of Corporate Affairs. SFIO is a multi-disciplinary institution to investigate cases related to serious fraud, contraventions of the provisions of Company Law, Banking Law and Taxation Law, white collar crimes, etc. SFIO has an exemplary record of conducting several intricate investigations and prosecuting Corporates and their Directors. It is the top institution to investigate the charges of fraud against the companies, alleged scams and violation of SEBI regulations.
Enforcement Directorate (ED) evolved from being an ‘Enforcement Unit’ under the Department of Economic Affairs, formed in 1956 to investigate cases of violations of Exchange Control Laws under the provisions of Foreign Exchange Regulation Act, 1947 (FERA), to being a holistic institute under the Department of Revenue, carrying out investigations for the alleged violations of the provisions of the Foreign Exchange Management Act, 1999 (FEMA) and the Prevention of Money Laundering Act, 2002 (PMLA). It has been tuned on the lines of the International Anti-Money Laundering regime to conduct investigations against charges of money laundering and other corruption charges. ED has acquired greater significance in today’s criminal investigation matters of corruption and money laundering and has a larger ambit of prosecuting the accused. The ED has recently been quite in limelight for carrying out several high profile raids and investigations on the basis of alleged charges, and for expanding its scope of conducting investigations.
In recent times, the Central Investigative Agencies have come under heavy public scrutiny. The reputation that used to adorn these agencies seems to be wearing out in the conscience of the public, mainly due to the allegations of false raids being conducted, investigations being carried out to pursue political vendetta, and harassing the critics of the ruling Party.
Current Scenario & Social Legitimacy:
Though established under different ministries of the Government of India, these investigating agencies are autonomous bodies, enjoying de-facto legitimacy through the legislative intent, and do not come under the direct control of the Central Government. These bodies work independently, carry out independent investigations against the charges brought before them and prosecute the offenders based on such investigations. These bodies are the premier Investigative Agencies of India, garnering great public trust and faith.
However, in recent years, these institutes have come under larger public scrutiny. There have been instances where these bodies of repute have been accused of bypassing their standard operating procedures and expanding their ambit of investigations in serving the larger opinion of the Government. The conduct of these institutions, CBI and ED in particular, have been condemned on various occasions by the popular opinion. Also, there have been instances where two or more agencies have been involved with a particular case, allegedly to fulfill the political aspirations of the ruling party, causing multiplicity of proceedings and prolonged incarceration of the accused, who are mainly from the opposition parties or are the critics of the government.
In recent years, the ruling Government has been time and again accused of using the investigative agencies as a tool for political vendetta. The timing of such raids conducted by these agencies appear suspicious to various quarters of the public. Such alleged political influence is irrespective of which political party rules at the Center. While hearing the ‘Coalgate Scam’ case in 2013, an irate Judge of the Supreme Court opined that the CBI has become a “caged parrot” that answers to “its master’s voice”. In 2019, the raid by CBI at the residence of Kolkata Police Commissioner in connection to the Saradha chit fund scam case, was conducted unannounced and without any warrant. This was allegedly done in retaliation to a rally organized by the National Opposition leaders against the government at the Center, and was condemned by various classes of public, as the CBI tried to breach the protocols and conducted the raid in violation of the federal structure of the Government.
Another incident of CBI arresting the former Union Minister P. Chidambaram in the INX Media case, even when his anticipatory bail plea was to come up before the Supreme Court on the very next day, was condemned by the popular opinion. The recent arrest of three Trinamool Congress MLAs, including two ministers of the West Bengal Government, made by the CBI was alleged to be an act of targeting opposition leaders for vendetta politics. The raids conducted by the ED and the CBI in Maharashtra, on various political leaders associated with the Nationalist Congress Party, were also alleged to be done under political influence. The involvement of ED in the infamous case of Rhea Chakraborty, along with the raids conducted by the NCB, have been seen by many as targeted harassment of the accused, and were believed to be in contradiction to the principles of criminal jurisprudence of the country. In addition to these, there have been many other instances where these investigating agencies seem to have acted under the influence of political overreach, thereby bringing these agencies under greater public scrutiny for deviating from the established democratic framework.
OUR TAKE
As rightly stated by the CJI in his speech, these agencies indeed enjoy the de-facto legitimacy, but the need of the hour is to gain the social legitimacy that these institutions seem to have lost in recent years.
Several instances of investigative overreach by the agencies, and other instances where these agencies decided to tie their own hands, like in the Vyapam Case, make one question the autonomy and independence of these institutions and provide for a view of existing political nexus between these institutions and the ruling party at the Center. These instances of deviation from the democratic framework provide a valid reason for the setting up of an umbrella body to bring these agencies under its roof, and for providing the much needed legislative oversight required for the impartial functioning of these agencies.
To start with, the setting up of an umbrella institution will help these agencies garner back the reputation, faith and trust of the general public. The umbrella institute, possessing the requisite autonomy in the truest sense, with a defined set of SOPs, ambits of investigations, and specialized wings, will help in avoiding multiplicity of proceedings. Establishment of specialized autonomous Wings of Prosecution and Investigation, as suggested by the CJI, will also act as an additional safeguard in ensuring the independence of these agencies from the ruling government. One can hope that through such a parent organization overlooking these institutes, the investigating agencies will not be used as a tool for political aspirations and political vendetta, and their competence will not go futile.
Ripple Effect On The Corporate Sector
The Government, through various legislations and establishment of regulating bodies like the SEBI, have been trying to strengthen the corporate governance structure in the country.
In recent years, India has passed at least five legislations specifically supporting efforts towards preventing corporate fraud, malpractice, and misconduct. Regulators are aware of the challenges faced by organizations in curbing fraud and are determined to ensure that the business is conducted ethically. The Prevention of Corruption (Amendment) Act, 2018 is now more comprehensive and targets bribe givers too, with the objective of placing accountability on commercial organizations to ensure that they work towards putting in place adequate measures designed to prevent bribery. Section 9 of the Amended Act now specifically deals with commercial organizations to include all forms of business structures, employees and vendors. The Fugitive Economic Offenders Act, 2018, has been enacted to deter individuals involved in fraud and other economic offence from fleeing the country in order to escape criminal prosecution. This principal approach is certainly in line with global standards of anti-bribery and anti-corruption measures.
In this context, the suggestion made by the CJI will have ripple effects and its repercussions will be seen in the Private Sector as well. Like the umbrella body suggested for investigating agencies, there must be an umbrella organization to enforce various regulations and laws relating to the Corporates. The establishment of such an umbrella organization will ensure effective implementation of the laws and regulations, placing proper and more concrete checks on the activities of the directors and other officers of the corporations.
As of now, responsible companies are leading the way by having set up their own whistleblower handling mechanisms and integrity governance frameworks based on global best practices and benchmarks. What is required, though, is to create an awareness amongst the private companies to view the corporate governance as not a supportive function, but as one of the embedded goals of the organization to create an ethical, corruption-free and secure workplace. For this, companies must look to get experts on board for conducting internal investigations, and hire external independent investigative agencies in cases which require serious consideration into the affairs of the company, to prevent loss of money, reputation and stakeholder confidence.
Contributed by Legal team @ Intelaw Consulting.
Intelaw Consulting is India's first and the only 'Investigative Services Company' founded and managed by ex-law enforcement and intelligence officers, consultants from top-tier firms and subject matter specialists.