Enforcement Directorate (ED)

Enforcement Directorate

Context:

The Supreme Court on recently cautioned the Enforcement Directorate (ED) against creating an “atmosphere of fear”, after the Chhattisgarh government alleged that the central agency was trying to implicate Chief Minister Bhupesh Baghel in a money laundering case.

About Enforcement Directorate:

The Directorate of Enforcement is a multi-disciplinary organization mandated to investigate offenses of money laundering (PMLA) and violations of foreign exchange laws (FEMA).

ED’s legal status:

• The ED is a statutory body and its powers are derived from the following laws:
• Foreign Exchange Management Act, 1999 (FEMA)
• Prevention of Money Laundering Act, 2002 (PMLA)
• Fugitive Economic Offenders Act, 2018 (FEOA)

ED’s jurisdiction:

• Both FEMA and PMLA apply to the whole of India. So, the ED can take action against any person on which this act applies, irrespective of location.
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• ED cannot take an action Suo motu. One has to complain to any other agency or Police first and then ED will investigate the matter and will identify the accused.

Director of ED – Appointment and Tenure

• The appointment of the ED director is based on the provisions of the Central Vigilance Commission Act, 2003.
• The Centre appoints the director on the recommendation of a committee, with the Central Vigilance Commissioner as chairperson. Other committee members are secretaries in the Finance, Home, and Personnel & Training ministries.
• The Enforcement Directorate’s director is appointed for a term of 2-years with security of tenure. (Can be removed on the grounds of misconduct, incompetence & gross immortality) .
• Recent ordinances promulgated on Nov 14, 2021 paves the way for an incumbent director of CBI or ED to get three extensions of one year each after his/her 2 year term ends. Any such extensions will have to be recommended by a committee recording in writing why it would be in a national interest.
• This ordinance is alleged to violate the independence of the ED and the rule of law. It is contended that the carrot-and-stick policy of granting piecemeal extensions of only one year at a time to the ED director creates an atmosphere of uncertainty and insecurity, which prevents the director from acting independently and fearlessly.

How to improve the independence of the ED?

• The ED should be given a fixed tenure for its director. This would make it more difficult for the government to remove the director for political reasons.
• The appointment of the ED Director should be made by a committee consisting of the Prime Minister, the Leader of the Opposition, and the Chief Justice of India, as in the case of the CBI Director.
• The ED should be given more autonomy. This could be done by giving the ED a separate budget and by making it more difficult for the government to interfere in its investigations.
• The ED should be subject to more public oversight. This could be done by creating a parliamentary committee to oversee the ED’s activities or by making its investigations more transparent.
• The ED should be strengthened by increasing its resources and capabilities. This would allow the ED to investigate more complex economic crimes and to prosecute more cases.

Mains question:

Q: India needs an independent umbrella institution for probe agencies. critically analyze. (250 words) 15 M