Confiscation of immovable properties: The most-effective solution for financial frauds

India has witnessed an unusually large number of serious financial frauds in the last few years, leading to a colossal loss of lakhs of crores of rupees of the taxpayers. And the nation, it seems, is barely able to give a befitting response to the scamsters. The notorious cases of Lalit Modi, Mehul Choksi, Nirav Modi, Vijay Mallya appear to be just the tip of the iceberg.

The institutionalised plunder by scamsters and organised crime syndicates like those of Dawood Ibrahim, Iqbal Memon, etc. have already bled the nation, leading to the collapse of many financial institutions and banks.

The latest entrant in the hall of shame is the PMC Bank of Mumbai. It is estimated that the turnover of 200 years of banditry-dacoities committed by the likes of Sultana, Man Singh, Madho Singh, Mohar Singh, Tahsildar Singh, etc. in the notorious Chambal ravines of UP, Rajasthan and MP, is estimated to be around Rs 150 crore

On the other hand, the modern-day scamsters have beaten all previous records of loot and their plunder is estimated to be in the tune of billions of rupees and the damage is still being assessed. This brazen loot of public money is immensely more dangerous than the dacoities of the past because of their sheer magnitude and possibly malignant, far-reaching ramifications for banks and financial institutions.

The common citizens are the worst sufferers and it is a tragedy that many victims of PMC Bank fraud have publicly expressed that they are contemplating committing suicide.

The entire nation is incensed by this naked display of avarice combined with criminality. The existing perception is that the government and the regulatory agencies did not do enough to prevent the depredations of these organised gangs of scamsters.

It is also alleged that those in powerful positions shamelessly aided and abetted these nefarious activities and provided escape routes to them, one after the other, for how else could they have all gone underground, without exception.

All round, full throttle, damage-control measures would be the only way forward under these testing circumstances to salvage the credibility and economic viability of the institutions and recover the plundered public wealth.

Prompt recovery and attachment of moveable and immovable properties of the culprits is the most effective, time-tested strategy to bring such economic offenders on their knees. Several laws in India have this provision, like the Narcotic Drugs and Psychotropic Substances Act, 1985, Maharashtra Control of Organised Crime Act, 1999, Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986, Prevention of Money Laundering Act, 2002, Benami Transactions (Prohibition) Amendment Act, 2016, Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act,1976, etc. But the will to execute these provisions of property attachments, purposefully and unsparingly, is sadly missing.

Take the example of Dawood Ibrahim's properties. The reserve price of 11 of his Mumbai properties was fixed at a paltry Rs 1.2 crore in 2001. Despite that, there were no buyers for years together.

The terror of Dawood had deterred all prospective customers. Since the properties could not be auctioned, the tenants were permitted to stay on. A Delhi advocate made very serious and sincere attempts to bid for and buy one property, Hotel Raunaq Afroz, but his attempts were torpedoed by red tape and obstinacy. Haseena Parkar, the sister of Dawood, was in possession and was managing the property on his behalf.

Even after prolonged litigation extending to more than 15 years and the death of Haseena Parkar, her children stubbornly continued the litigation. The latest disclosure by the ED that the prime Mumbai properties at 11 locations, including, ‘Millenium’, Bandra, etc. and also in Bengaluru, belong to none other than Iqbal Memon (Mirchi), with the connivance and blessings of powerful politicians.

Now take the success story of UP’s Special Task Force (STF). They succeeded in neutralising a gang of land mafia, attached his properties and for decades they ran their office from this B-3 Vigyanpuri property.

After eliminating the notorious Prakash Shukla, there were no takers for his property due to fears of reprisals. These properties were also attached and functioned as the camp office of the STF. But the administrative tragedy is that the task of attachment of property is seldom given the topmost priority, for obvious reasons.

No tangible results will emerge with a half-hearted and lukewarm approach. This is an excellent channel and means to recover the scandalous loot and shatter the morale of the crime syndicate.

The Mumbai properties and all such assets need to be attached with immediate effect and if no member of the public comes forward to bid, due to fear, then like the in case of the STF, they can be converted into government offices, hospitals, police stations, as per requirement.

There are a number of instances showing where there is a will there is a way, and exemplary action has been taken with considerable application of some mind and innovation. One such success story is from Noida, Gautam Buddha Nagar, UP, where the fearless district magistrate BN Singh has indeed created an atmosphere of terror for the mafia.

His out-of-the-box thinking and approach comes at zero budget and is most effective as is evident by the unprecedented recoveries made in the district in recent times.

BN Singh’s strategy is simple. He writes to all bank managers, asking them to furnish all details of bank accounts, lockers, fixed deposits, etc. not only in the names of the accused but also their family members. The next instruction goes to the registrar of properties, asking for the details of all properties in the name of the culprits and all his relatives.

Another instruction goes to the regional transport officer for a similar report on cars/automobiles owned by the criminals and family members.

Now a consolidated data bank is prepared about the various assets of the criminals and the entire might of the government comes down on them like a ton of bricks.

The matter does not end here. Repeated and regular loudspeaker announcements are made in the locality for the common people to know that there is a mafia, these are his properties and the government has since attached all of them and the advice to one and all is to keep away from any transactions pertaining to these assets.

This indeed breaks the back of the underworld, making the government immensely richer by hundreds of crores. This is a success story of just one district of the state.

What if this were to be replicated in the entire state and the country? But then one has to have this no-nonsense approach towards administration.