–          Excerpt from “The Levelling: What’s Next After Globalization” by Michael O’Sullivan

The burning question ‘What is Globalisation’ was answered by Roland Robertson, a sociologist and theorist of globalization in 1992 as “the compression of the world and the intensification of the consciousness of the world as a whole” and while this is credited as one of the very first definitions of Globalisation, the word is still constantly evolving, traveling and adapting to the needs of the world. Early staunch believers of globalization now think that it has overstayed its welcome and it might be time to adjust to a new world order of multipolarity. Out of all the overarching achievements of this phenomenon what everyone can agree upon is the unequal distribution of wealth and the uneven impact of this global term. One can argue that since its birth, globalization has been considered an unstoppable force. It raised the living standards for many developing countries considering how easily they welcomed the “western” idea of quality living standards (It has always been about imitating what the west will do next). It is interesting to note that the economy was truly globalized in the early 20^th century when the European countries colonized Asia and Sub-Saharan Africa. They began to turn their colonies into suppliers of raw materials for European manufacturers. Let’s not forget that it was a private company called East India Company, the original corporate raiders who looted India under the garb of making it “more civilized”. But that ended eventually and so did the golden years of Globalisation, as asserted by Harvard professor Jeffry Frieden in his standard account, Global Capitalism: Its Fall and Rise in the 20th Century, “The opening years of the 20th century were the closest thing the world had ever seen to a free world market for goods, capital and labour”  

A BRIEF HISTORY

Last year, at the Annual Meeting of the World Economic Forum(meeting brings together some 3,000 business leaders, international political leaders, economists, celebrities, and journalists for up to five days to discuss global issues, across 500 public and private sessions) the discussion witnessed a backlash to globalization. The main focus of the meeting was on ‘Globalisation 4.0‘ and its future impact on global corporations. The fact is, We have entered a digital age and your traditional trade measures don’t reflect the real supply chain. If you buy shoes from the company Nike, chances are the product was procured, manufactured, and produced in different countries each and that changes the game. Before we move towards the future of the economy in the digital realm, let’s go over the past to get a better understanding of the matter. People have exchanged goods from the beginning of civilization but International trade truly owes its birth to Silk Road in the 1^st century BC. Trade ceased to be a regional phenomenon when goods from china could be availed at Rome, another side of the world.

The First wave of Globalisation (late nineteenth and early twentieth century)

The Industrial Revolution was accompanied by the invention of the steam engine and the emergence of Great Britain as a powerful and dominant player in the global trade and economy. That growth rate propelled exports from a share of 6% of global GDP in the early 19th century, to 14% on the eve of World War I. From the building of railways in India to managing mines in Africa, Britain benefitted the most from the advent of globalization getting access to cheap labor, transportation, and relaxation on trade barriers. The downside was the exploitation of colonies like India and Africa who couldn’t cope with the global economic pace for lack of capital, freedom, and technology.

In the years between the world wars, the situation was worsened and quite reversed as borders were closed, migration was limited, political structure was threatened. What followed was the killing of millions of soldiers and the downfall of nation-states. The final push was The Great Depression in the US and widespread poverty in the East. By the end of the Second World War, trade as a percentage of world GDP had fallen to 5% – a level not seen in more than a hundred years.

Second and Third-wave of Globalisation  

It wasn’t all over for Globalisation, the USA emerged as the sole hegemony after the fall of the Soviet Union which meant a new world order. Institutions like European Union (EU) and the World Trade Organisation (WTO) boosted the global economy and encouraged states to practice free trade and enter into agreements and the response was positive including the addition of China to the mix. The invention of the internet made trade and communication ever more direct and you could have doorstep deliveries within a span of a day or two.  Internet was ruling the world and giving access to abundant data. The third world countries were exposed to new technology and developing their own. There were Socio-Cultural implications and the beginning of the modern world. Everybody participated in the global economy and gained something out of it, some more than others. But it was an explosion of Multinational corporations and technological advancement. 

INDIA AND GLOBALISATION: A BACKDROP

India after gaining independence went on a road to nation-building and self-reliance. We took measures to boost our economy and use our own resources and labor to help build the economy. The first Five-year Plan was about a complete focus on agriculture as we are majorly an agrarian society. But the road to self-reliance was not easy, as India saw failed economic planning and low output and growth. Our Economy was dying by the 1990’s and we were in deep crisis. With concerns from IMF over debt payment and lack of fiscal adjustments from the beginning of the 1980’s, it was time to take action. The New Economic Policy (NEP) was formulated in 1991 and it went to the International agencies for aid and reforms in the economic structure of the country. It was rather out of necessity that we were made to introduce Liberalisation, Privatisation, and Globalisation into our reforms. We were asked to open the restrictions on trade and encourage foreign trade with other countries to help build healthy competition amongst domestic industries but most importantly it was about immediately diminishing the debt burden on the country.

Now Globalisation may have given temporary relief to India during the economic crisis of 1991 but in the long run, it has only caused us damage and will prove to be dangerous to our local industries. The concentration of wealth in the hands of the few elites in India and the growing gap between the rich and the poor is a clear indication of catastrophe ahead.

INTERNATIONAL LAW AND GLOBALIZATION

During the era of globalisation the scope and authority of International law has also dramatically expanded. Only a vast network of international law and dozens of international organizations make globalization possible. Treaties and other types of agreements are signed among countries to set rules for international trade and finance. The United Nations facilitates international diplomacy; the World Health Organization coordinates international public health and protection, and the International Labor Organization monitors and fosters workers’ rights around the world.  

Questions of the authority of a country within its own borders—that is, its state sovereignty—the role of the individual in the international community of nation-states, and the authority of international organizations, have all evolved in light of the forces of globalization.

World Economic Forum

The World Economic Forum (WEF), based in Cologny, Geneva Canton, Switzerland, is an international NGO, founded in 1971. The WEF’s mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas”.

The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does.

The World Economic Forum and particularly its annual meeting in Davos are among others criticised regarding the public cost of security, the formation of a wealthy global elite without attachment points to the broader societies, undemocratic decision processes, gender issues and a lack of financial transparency.

MERITS OF GLOBALISATION: WHAT LIES AHEAD

RAPID GROWTH

 Due to rapid growth in developing countries (especially in China and India), the number of people living on less than a dollar a day decreased by 200 million since the 1980s. Even when excluding China, the data shows that developing countries that embraced globalization grew faster than developed countries in the 1990s, specifically 3.5 percent versus 2 percent. Globalization helped developing nations to open their economies and challenge themselves. There is ample evidence to conclude that free-market policies backed up with sound and proper domestic laws are the road to development. Other indicators of well-being include life expectancy rate and infant mortality rate improved drastically during the second wave of globalization.

BOOM OF SERVICE SECTOR

Globalization was aided with the invention of technology and the development of telecommunication, ports, airports, and subsequently created jobs in the service sector. In the case of India, there has been increased migration from rural to urban areas with the creation of “smart cities”. People now have better life opportunities and aspirations with the growth of cities. Notwithstanding that the jobs are only concentrated in the service sector and developing nations like India are still struggling with poverty and lack of education.

CULTURAL INTEGRATION

Access to Information is the greatest merit of Globalisation as now with a click you can learn any foreign language and get exposed to completely different cultures of music, film, and arts. It also helps in the expansion and promotion of one’s own rich and distinct culture. During the Cold War, the ideological war was fought with cultural influence and America still will be considered the most dominant global culture. Most social media and internet firms are American, MNC’s like Mcdonalds is worldwide recognized and consumed.

DE-MERITS OF GLOBALISATION

ENVIRONMENT DEGRADATION

Can climate change and globalization co-exist? Are we to ignore the environmental consequences of the Industrial Revolution and the illegal mining and exploitation of nature by the giant corporations? The dumping of responsibility on the developing nation as part of taking accountability by the major powers of the world like the USA is quite ironic. But now even countries like India, thanks to globalization contribute to environmental degradation and violation of international norms. The sustainability of the environment is the last thing on the profit-orientated monsters of the corporate world.

POLITICAL CONSEQUENCES

There is a general mistrust in the minds of the people for the state. It is because of the capitalist approach of the state. The rich are becoming richer, there is only little happening for the sake of development. The poor section of the society is facing the heat and impact of globalization. There are no jobs for the non-service sector in countries like India. The issue of Unemployment has risen as the jobs are taken by migrants. The state has abandoned the role of a “social welfare state” and people are still obsessed with the idea of globalization which in fact is permanently damaging the developing countries’ growth.

ECONOMIC INEQUALITY

It is also argued that the movement of globalized goods has fuelled inequality, environmental degradation, and only deepened economic inequalities.

Globalisation has been linked to rising inequalities in income and wealth. Evidence for this is the growing rural–urban divide in countries such as China, India and Brazil. Many of the world’s poorest people do not have access to basic technologies and public goods. They are excluded from the benefits. Who is benefitting from globalization is the focal point. There is also a concern over higher levels of structural unemployment. Growing Standardisation is another demerit for developing countries as they experience a loss of economic and cultural diversity. The giant firms and global multinational brands dominate domestic markets in many countries now.

CONCLUSION

Some scholars say that globalization is dead and non-functional now. They call for what is known as the “path to multipolarity”. There is a new world order evolving and countries like the USA, CHINA, and INDIA will play a major role in it. Globalization has no central body or authority to shape globalization laws except the World Economic Forum. Anti-Globalists are against the idea of free trade as it promotes exploitation and inequality. It is a threat to the regional development of a nation. With recent developments like Britain voting to leave the biggest trading bloc in the world to Trump withdrawing major trade deals and calling for “Americanism” not globalism as the new creed chances are that globalization will lose its charm if it hasn’t already. With more and more states adopting protectionist policies, we are looking at a new world perhaps.

Bibliography

 BIBLIOGRAPHY (2003). Globalisation: A Blessing or a Curse. IMF SURVEY.

The Economist . (2019). Retrieved from https://www.economist.com/open-future/2019/06/28/globalisation-is-dead-and-we-need-to-invent-a-new-world-order

World Economic Forum . (2019). Retrieved from https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/

Eswar Prasad, K. R.-J. (2003). Effects of Financial Globalisation on Developing Countries: Some Empirical Evidence. Economic and Political Weeky .

Globalization 101. (n.d.). Retrieved from http://www.globalization101.org/category/issues-in-depth/international-law/

Saval, N. (2017, july 14). The Guardian. Retrieved from https://www.theguardian.com/world/2017/jul/14/globalisation-the-rise-and-fall-of-an-idea-that-swept-the-world

Sengupta, C. (2001). Conceptualising Globalisation: Issues and Implications. Economic and Political weekly .

Treigiene, Z. B. (2011). GLOBALIZATION AND GROWTH IN RECENT RESEARCH. ResearchGate.

Vanham, P. (2019). World Economic Forum . Retrieved from https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/

World Economic Forum. (n.d.). Retrieved from https://www.weforum.org/about/world-economic-forum

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Name of Judgement: National Legal Services Authority v. Union of India & Ors.

Court Name: The Supreme Court of India

Date of Judgement: 15 April 2014

Citation: AIR 2014 SC 1863

Bench Name: K.S. Radhakrishnan, A.K. Sikri

Section/Act Name: Article 21 in The Constitution Of India 1949

Article 14 in The Constitution Of India 1949

Article 19(1)(a) in The Constitution Of India 1949

The Legal Services Authorities Act, 1987

Summary of Facts: In 2012, the National Legal Services Authority (NALSA) constituted under the Legal Services Authorities Act, 1987, to provide free Legal Services to the weaker sections of the society and to organize Lok Adalats for amicable settlement of disputes filed a social interest litigation asking for several directions from the Supreme Court, including granting of equal rights and protection to transgender persons; inclusion of a third category in recording one’s sex/gender in identity documents like the election card, passport, driving license and ration card; and for admission in educational institutions, hospitals, amongst others. In 2013, this matter was tagged together with a petition filed in the Supreme Court by the Poojaya Mata Nasib Kaur Ji Women’s Welfare Society, an organization working for kinnars, a transgender community. The Lawyers Collective had filed an intervention, on behalf of Ms. Laxmi Narayan Tripathy, a Hijra/transgender activist, seeking recognition of self-identified gender of persons, either as male/female/third gender, based on their choice.

Issues Raised: Whether non-recognition of diverse gender identities violates Articles 14 and 21 of the Constitution of India?

Contentions of the petitioner:

1.      It was contended by the petitioner that every person of the transgender community has a legal right to decide their sexual orientation and to espouse and determine their identity. It was also submitted that since the Transgender Persons (TGs) are neither treated as male or female nor given the status of a third gender, they are being deprived of many of the rights and privileges which other persons enjoy as citizens of this country. TGs are deprived of social and cultural participation and hence restricted access to education, health care and public places which deprive them of the Constitutional guarantee of equality before the law and equal protection of laws.

2.      Further, it was also pointed out that the community also faces discrimination to contest election, right to vote, employment, to get licenses, etc. and, in effect, treated as an outcast and untouchable. Learned senior counsel also submitted that the State cannot discriminate against them on the ground of gender, violating Articles 14 to 16 and 21 of the Constitution of India.

3.      The transgender persons have to be declared as socially and educationally backward classes of citizens and must be accorded all benefits available to that class of persons, which are being extended to male and female genders. Learned counsel also submitted that the right to choose one’s gender identity is integral to the right to lead a life with dignity, which is undoubtedly guaranteed by Article 21 of the Constitution of India. Learned counsel, therefore, submitted that, subject to such rules/regulations/protocols, transgender persons may be afforded the right of choice to determine whether to opt for male, female, or transgender classification.

Contentions of the Respondent:

Shri Rakesh K. Khanna, learned Additional Solicitor General, appearing for the Union of India, submitted that the problems highlighted by the transgender community is a sensitive human issue, which calls for serious attention. He pointed out that, under the aegis of the Ministry of Social Justice and Empowerment (for short “MOSJE”), a Committee, called “Expert Committee on Issues relating to Transgender”, has been constituted to conduct an in-depth study of the problems relating to transgender persons to make appropriate recommendations to MOSJE. It was also submitted that due representation would also be given to the applicants, appeared before this Court in the Committee, so that their views also could be heard.

Judgment: The court has observed that Transgender is generally described as an umbrella term for persons whose gender identity, gender expression or behavior does not conform to their biological sex. TG may also take in persons who do not identify with their sex assigned at birth, which includes Hijras/Eunuchs who, in this writ petition, describe themselves as “third gender” and they do not identify as either male or female.

In this 115 page landmark judgment, the Supreme Court traced the history of the Transgender Community in context of India. It observed:

“12. TG Community comprises of Hijras, eunuchs, Kothis, Aravanis, Jogappas, Shiv-Shakthis etc. and they, as a group, have got a strong historical presence in our country in the Hindu mythology and other religious texts. The Concept of tritiya prakrti or napunsaka has also been an integral part of vedic and puranic literatures.”

The onset of the colonial rule marked instances of great discrimination and trauma for the transgender community. During the British rule, legislation was enacted to supervise the deeds of Hijras/TG community, called the Criminal Tribes Act, 1871, which deemed the entire community of Hijras persons as innately ‘criminal’ and ‘addicted to the systematic commission of non-bailable offenses’. The Act provided for the registration, surveillance, and control of certain criminal tribes and eunuchs and had penalized eunuchs, who were registered, and appeared to be dressed or ornamented like a woman, in a public street or place, as well as those who danced or played music in a public place. Such persons also could be arrested without warrant and sentenced to imprisonment up to two years or fine or both.

Further, the court exhaustively relied on various judicial pronouncements and legislations in the international arena to highlight the fact that the recognition of “sex identity gender” of persons, and “guarantee to equality and non-discrimination” on the ground of gender identity or expression is increasing and gaining acceptance in international law and, therefore, be applied in India as well.

UNITED NATIONS AND OTHER HUMAN RIGHTS BODIES – ON GENDER IDENTITY AND SEXUAL ORIENTATION

“21. United Nations has been instrumental in advocating the protection and promotion of rights of sexual minorities, including transgender persons. Article 6 of the Universal Declaration of 17 Human Rights, 1948 and Article 16 of the International Covenant on Civil and Political Rights, 1966 (ICCPR) recognize that every human being has the inherent right to live and this right shall be protected by law and that no one shall be arbitrarily denied of that right. Everyone shall have a right to recognition, everywhere as a person before the law. Article 17 of the ICCPR states that no one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honor and reputation and that everyone has the right to protection of the law against such interference or attacks.”

Another important reference pointed out was a detailed study conducted by the United Nations Development Program (UNDP – India) It submitted a report in December 2010 on Hijras/transgenders in India: “HIV Human Rights and Social Exclusion”. The Report stated that the HIV Human Immunodeficiency Virus and Sexually Transmitted Infections (STI) is now increasingly seen in Hijras/transgenders population.

ARTICLE 19(1)(a) of the Indian Constitution and Transgenders

The court also recognized the right of “self- determination” to the transgender persons. The freedom of expression guaranteed under Article 19(1)(a) includes the freedom to express one’s chosen gender identity through varied ways and means by way of expression, speech, mannerism, clothing, etc. Therefore:

“66. Gender identity, therefore, lies at the core of one’s personal identity, gender expression, and presentation and, therefore, it will have to be protected under Article 19(1)(a) of the Constitution of India.”

The operative part of the judgment

129. We, therefore, declare: (1) Hijras, Eunuchs, apart from binary gender, be treated as “third gender” for safeguarding their rights under Part III of our Constitution and the laws made by the Parliament and the State Legislature. (2) Transgender persons’ right to decide their self-identified gender is also upheld and the Centre and State Governments are directed to grant legal recognition of their gender identity such as male, female, or as third gender. (3) We direct the Centre and the State Governments to take steps to treat them as socially and educationally backward classes of citizens and extend all kinds of reservations in cases of admission in educational institutions and for public appointments. (4) Centre and State Governments are directed to operate separate HIV Serosurvellance Centres since Hijras/ Transgenders face several sexual health issues. (5) Centre and State Governments should seriously address the problems being faced by Hijras/Transgenders such as fear, shame, gender dysphoria, social pressure, depression, suicidal tendencies, social stigma, etc. and any insistence for SRS for declaring one’s gender is immoral and illegal. (6) Centre and State Governments should take proper measures to provide medical care to TGs in the hospitals and also provide them separate public toilets and other facilities. (7) Centre and State Governments should also take steps for framing various social welfare schemes for their betterment. (8) Centre and State Governments should take steps to create public awareness so that TGs will feel that they are also part and parcel of the social life and be not treated as untouchables. (9) Centre and the State Governments should also take measures to regain their respect and place in the society which once they enjoyed in our cultural and social life

Effect of the Judgement:

Constitutionality of Section 377 IPC

On 6th September 2018, a five-judge Bench unanimously struck down Section 377 of the Indian Penal Code, to the extent that it criminalized same-sex relations between consenting adults. LGBT individuals are now legally allowed to engage in consensual intercourse. The Court upheld provisions in Section 377 that criminalize non-consensual acts or sexual acts performed on animals. (Navtej Singh Johar vs. UOI; Akkai Padmashali vs. UOI)

Transgender Persons (Protection of Rights) Act, 2019

Given the 2014 judgment, the parliament introduced a series of bills addressing the rights of transgender people. The most recent one was introduced in July 2019, following which; it came to be known as the Transgender Persons (Protection of Rights) Act, 2019. The Act has received a negative response from the transgender community as it nullifies the NALSA judgment in their view. The new law is not only inadequate, but they have also claimed, it will also reverse the gains made to secure the rights of transgender people.

In recent news, The Karnataka High court has ordered an issue of notice to the Union government as Ondede, a public charitable trust working extensively with the transgender community in the State and others have filed a PIL petition questioning the constitutional validity of a series of provisions of the Transgender Persons (Protection of Rights) Act, 2019.

The petitioners have termed Sections 4,5,6,7, 12(3), 18(a) and 18(d) of the Act as violative of the fundamental rights of the equity before law, the prohibition of discrimination on grounds of religion, race, sex or place of birth, the equality of opportunity in matters of public employment, and the protection of life and personal liberty guaranteed respectively under the Articles, 14,15, 16 and 21 of the Constitution.

Personal Comment: The judgment is no doubt a progressive step in the history of Indian legislation and part of our collective constitutional heritage. Nevertheless, it still is ambiguous and contradicting certain definitions and the first one being “who is a transgender”. The court has made vague interpretations of the term and has not attempted to broaden the scope of the term. For instance,  Hijra is a cultural community that falls under the umbrella term “transgender” but not all transgender are hijras.

It is not clear in the judgment whether hijras have the option to choose women or third gender status based on what they prefer? To avail of benefits like OBC reservations in jobs and education, would it be compulsory for trans women to get third gender identities? The process is not clear and neither is whether they have a choice. Gender identity is a broad spectrum and failure to recognize the diverse groups and their choices will not give proper effect to the legislation.

The distinction between sexual orientation and gender identity is brushed upon in the judgment but Indian society lacks the mindset to discuss sex at home. In the formative years of a child, all kinds of hormonal changes and confusion occur and a free and safe environment is a must for the child to breathe so training in gender sensitization should be encouraged to parents. There is also the pressing issue of lack of representation of the transgender community in the parliament. It is also very important that the rules/ methods and procedures of the implementation of the gender laws be simple and straightforward. This is because the bureaucracy, in particular, has never had suitable training on gender issues or sex education.

The post Case Recap: NALSA v Union of India (2014) appeared first on Legal Desire Media and Insights.

The world went through various phases of transformation after the Industrial Revolution in the eighteenth century. Technology has made our lives easier since its invention but who’s to say if humans run the world or the technology?  Now, we are in yet another transformation, forced to depend on technology more than ever. Who would have thought of complete deprivation of human intimacy and reliability on video calls for personal or public interaction of any sort? 

The ease of doing business is usually followed by the ease of committing a crime. Everything comes at a price they say, but the question is what price are you willing to pay? There is a reason that Economic crimes are considered a more complex and distinct criminal phenomenon. The Supreme Court has made an important distinction between economic crimes and other crimes: P. Chidambaram vs Directorate Of Enforcement, (2019) 9 SCC 5 

“Power under Section 438 CrPc (direction for anticipatory bail) being an extraordinary remedy has to be exercised sparingly; more so, in cases of economic offenses. Economic offenses stand as a different class as they affect the economic fabric of society”

The reason the bench referred to economic offenses as a different class is worth noting. So before we dwell on questions like what are economic crimes, how can we classify them, and what legislation is doing to prevent crimes of this nature, let us understand that not only does the rise in economic crimes pose a threat to the social and economic development of a country but the social damage caused by it is usually invisible. Economic crimes tend to divert the much- needed resources for boosting the country’s public services. In the context of India, where social welfare is required in every aspect of governance, the surge of economic crimes puts the welfare of the poor and, marginalized at stake. India is sadly infamous for corruption activities and since independence, we have had our share of big scams in the economic sphere. One reason for the selective judicial action and inefficient prosecution of this type of crime is the link of various powerful actors backed with political and economic influence.

WHAT ARE FINANCIAL CRIMES? 

Economic Crimes known as financial crimes involve crimes committed through deceit and are usually motivated by financial gain. It often involves the unlawful conversion of the ownership of the property to one’s own personal use. What separates them from common theft or robbery is the abuse of a position of trust. 

Financial crime can be committed by

An institution (public/private) like the banks through tax evasion, money laundering, insurance fraud, market manipulation, etc.

An individual (including public officials) through bribery, embezzlement, identity theft, forgery, etc.

TYPES OF FINANCIAL CRIMES 

With every second, the global economy gets more complex and the scope of financial crimes increases with it. This section gives an overview of some of the types/forms of financial crimes and their relevant legislation in India.

FRAUD 

. ‘Fraus Omnia Vitiate’ – Fraud vitiates everything. 

Fraud in the broadest sense is an intentional deception made for personal gain or to damage another person/ entity. Section 17 of the Indian Contract Act defines fraud as 

“17. ‘Fraud’ defined.—’Fraud’ means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent1, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:—”

But what motivates fraudulent activities one may ask? 

Fraud is truly motivated by greed. Moreover, opportunities to commit such a deceitful act may arise because of a weak control environment in an organization. 

A corporate fraud occurs when a company or an entity deliberately changes and conceals sensitive information. Companies adopt various modus-operandi to commit such corporate frauds, which may include misinformation in the prospectus, manipulation of accounting records, debt hiding, etc.

RELEVANT PROVISIONS 

The main statute governing criminal offenses in India is The Indian Penal Code, 1860 and the related offenses concerning fraud are dishonest misappropriation of property(S.403), criminal breach of trustS.405), forgery(S.463), falsification of accounts(S.477A) and cheating(S.415). (The Indian Penal Code, 1860)

Punishment for fraud concerning affairs of a company or anybody corporate is defined under Section 447 of the Companies Act as

“Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud involving an amount of at least ten lakh rupees or one percent…” 

Moreover, Serious Fraud Investigation Office (SFIO) has been set up by the Ministry of Corporate Affairs (MCA) and has the power to detect, investigate and prosecute white-collar crimes and frauds with multi-disciplinary ramifications or involve public interest.

BRIBERY AND CORRUPTION 

Corruption has seeped into every institution of India, there is no denying it. A fear that the system is so corrupt that it is nearly impossible to remain honest in the face of it. India is ‘Most Corrupt Country in Asia-Pacific Region’, according to a recent study by Transparency International, a Berlin-based NGO working against corruption. Seven out of 10 people in India, the study stated, had to pay a bribe to access public services. (Your story, 2017)

RELEVANT PROVISIONS 

The Prevention of Corruption Act 1988 (PCA) is the primary legislation relating to the prevention of corruption.

Some of the acts criminalized under The Prevention of Corruption Act 1988 (PCA) are:

Taking of gratification by a public servant in respect of an official act other than legal remuneration.

For a public servant, obtaining anything of value, without consideration from any person concerned in any proceeding or business transacted or about to be transacted by such public servant.

Criminal misconduct by a public servant. The offense of abetment under the PCA is also an independent, distinct, and substantive offense. Whether or not the offense is committed in consequence of the abetment is irrelevant.

Central Vigilance Commission (CVC), Central Bureau of Investigation (CBI), and State Anti-Corruption Bureau (ACB) are the authorities responsible for prosecution, investigation, and enforcement in cases of bribery and corruption.

CBI investigates corruption cases under the Prevention of Corruption Act, 1988 (PCA), and the Indian Penal Code 1860, while ACBs of the respective states investigate corruption cases of the concerned states.

MONEY LAUNDERING 

Under the Prevention of Money Laundering Act 2002 (PMLA), the offense of money laundering is defined as directly or indirectly, attempt to indulge, knowingly assist, knowingly becoming a party or being involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property.

Money laundering which is popularly known as Hawala transactions in India is the act of hiding the true origins of “dirty” money. Before the enactment of the Prevention of Money Laundering Act, 2002 this offense was covered under the violation of foreign exchange rules under the Foreign Exchange Regulation Act (FERA) and later under the Foreign Exchange Management Act (FEMA)

The Directorate of Enforcement (ED), and the director of the Financial Intelligence Unit of India (FIU), can exercise exclusive powers granted under the PMLA to prosecute and investigate in matters related to money laundering. The FIU is an independent body, which reports directly to the Economic Intelligence Council, and is responsible for coordinating national and international investigation and enforcement agencies in pursuing global efforts against money laundering and related crimes.

The Income Tax Act 1961 also prescribes certain requirements for certain professionals to maintain books of accounts and other supporting documents for general requirements of financial record keeping and disclosure. 

TERRORIST FINANCING 

As the name suggests, Terrorist financing is the illegal transfer of cash to terrorist organizations. One of the vital aspects of combating terrorism for any country is to choke the flow of funds to the terrorist. In India, more and more resources and efforts need to be devoted to launching a financial war against terrorism. It is a far more distinct and secretive activity as the terrorist financiers deliberately do not spend large amounts of money at once to avoid the attention of both the government as well as the financial institutions. 

RELEVANT PROVISIONS 

The Unlawful Activities Prevention Act 1967 (UAPA) covers offenses such as conspiracy and commission of an act which is considered to be a terrorist activity (that is, acts that threaten the economic security of India) through the illegal circulation of counterfeit currency and harboring of a terrorist

The National Investigation Agency (NIA) is India’s counter-terrorism task force. It was set up after the 2008 Mumbai terror attack as the central counter-terrorism investigation organization and was given the mandate to investigate serious offenses related to terrorist activities affecting the sovereignty, security, and integrity of the country. (The Economic Times, 2018)

RECENT INITIATIVES 

Fugitive Economic Offenders Act, 2018

This act seeks to confiscate the properties of economic offenders who have left the country to avoid facing criminal prosecution or refuse to return to the country to face prosecution. The Act allows for a person to be declared as a fugitive economic offender (FEO) if:

(i) an arrest warrant has been issued against him for any specified offenses where the value involved is over Rs 100 crore, and

 (ii) He has left the country and refuses to return to face prosecution.    

To declare a person an FEO, an application should be filed in a Special Court (designated under the Prevention of Money-Laundering Act, 2002) containing details of the properties to be confiscated, and any information about the person’s whereabouts.  The Special Court will require the person to appear at a specified place at least six weeks from the issue of notice. (PRS INDIA)

CONCLUDING REMARKS: REFORMS AND THE ROAD AHEAD 

The 1992 Indian stock market scam that shook India and immediately highlighted the loopholes in the banking sector which benefited the corrupt stockholders and brought the collapse of the Indian stock market is one of the many lessons in history that we should keep revisiting. It called for fundamental restructuring and preventive reforms in the economic sector (Harshad S. Mehta & Ors vs The State Of Maharashtra, 2001). Presently we have the legislation, what we lack is the proactiveness of the financial sector and the implementation of these laws. Our judicial system is burdened with thousands of cases and the delivery of justice is rather slow so people have lost faith in the legal mechanism. An alternative can be Internal Investigation, it allows the company to properly assess the allegations and find out the reality accompanied by carrying out a forensic investigation into the affairs of the company.

Forensic Accounting is a new and upcoming field that can be explained as the culmination of investigative and accounting skills. It aims to cross-checks the various financial records of a business to find any indication of fraud being committed and also provides an in-depth analysis of the financial books which could be presented in the court of law as evidence

The evolution of technology can be used to curb financial crimes and promote safety infrastructure. Artificial Intelligence (AI), Machine Learning (ML), and Data analytics (DA) can be used to distinguish fraudulent transactions from real transactions.

The Financial Action Task Force (FATF) is a global money laundering and terrorist financing watchdog that sets international standards to prevent illegal activities in the economic and financial channels of a country and its inter-connected linkages across the world. The same was going to review India’s anti-money laundering and terrorist financing regime this year as part of a regular review cycle after 10 years, but with a pandemic on everyone’s mind that has been postponed. One can only hope that India takes into account the necessary recommendations and moves towards a robust financial system. (Technical Report on Market Integrity – Issues and Status, 2002)

References:

The Indian Penal Code. (1860).

Harshad S. Mehta & Ors vs The State Of Maharashtra, 319-320 of 1996 (2001).

(2002). Technical Report on Market Integrity – Issues and Status. Reserve Bank of India.

(2007). Economic crime: people,culture & controls. India: PricewaterhouseCoopers.

The Companies Act. (2013).

Your story. (2017). Retrieved from https://yourstory.com/2017/12/8-scams-india

The Economic Times. (2018). Retrieved from https://economictimes.indiatimes.com/news/defence/nia-to-have-new-hq-complex-on-tuesday/articleshow/60993539.cms

P. Chidambaram vs Directorate Of Enforcement, 1831 (The Supreme Court of India December 2019).

The print. (2020). Retrieved from https://theprint.in/india/fatf-review-of-indias-anti-money-laundering-regime-postponed-to-early-2021-due-to-covid/468581/

Bharti, A. (n.d.). LEGISLATIVE MEASURES TO DEAL WITH ECONOMIC CRIMES IN INDIA. Retrieved from https://www.unafei.or.jp/publications/pdf/RS_No67/No67_22PA_Bharti.pdf

Indian Kanoon. (n.d.). Retrieved from https://indiankanoon.org/

PRS INDIA. (n.d.). Retrieved from https://www.prsindia.org/billtrack/fugitive-economic-offenders-bill-2018

The times of India. (n.d.). Retrieved from 2019: https://timesofindia.indiatimes.com/india/bail-in-economic-offences-will-hamper-probe-supreme-court/articleshow/71001667.cms

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