The central government has recently informed the Supreme Court (SC) that the tenure of the Enforcement Directorate’s (ED) Chief will not extend beyond November 2023. This update surfaced in the context of the announcement in November 2021 where the President of India issued two ordinances, allowing the ED Director’s tenure to extend from two years to up to five years with the possibility of three annual extensions.
This move was met with approval from the SC, stating there is no restriction on the Central Government’s power to appoint the ED for more than a two-year period. However, these extensions would be permissible only in rare and exceptional cases for a short period of time.
Extension and Its Impact
The recent extension has invited scrutiny as it comes at a time when the Financial Action Task Force (FATF) is conducting a pending review. The Union Finance Ministry justified the extension by stating its necessity for maintaining continuity for cases at crucial junctures requiring historical knowledge and context. They argued that a newly appointed director would need considerable time to acclimate to the office and ED operations, which could compromise efficiency. Despite this reasoning, the decision has been challenged again in the SC due to legal concerns about extending the tenure beyond previously acceptable limits.
About Enforcement Directorate (ED)
The ED is a multisectoral organization tasked with investigating offences of money laundering and violations of foreign exchange laws. Under the Department of Revenue of the Ministry of Finance, the ED operates in strict adherence to the Constitution and Indian Laws.
Housed in New Delhi, the ED is headed by the Director of Enforcement. Additionally, five regional offices situated in Mumbai, Chennai, Chandigarh, Kolkata, and Delhi are overseen by Special Directors of Enforcement. The ED’s staff includes officers directly recruited or drawn from other investigative agencies, including IRS, IPS, IAS, Income Tax officers, Customs officers, and the police.
Tenure Specifics
Generally, ED directors have a two-year tenure. However, this term can be extended to five years through three annual extensions. The amending of the Delhi Special Police Establishment (DSPE) Act, 1946, and the Central Vigilance Commission (CVC) Act, 2003, grants the government power to keep the two chiefs in their posts for an additional year after their two-year terms end.
ED’s Functionality and Legislation
The ED has been given the responsibility of implementing several key laws and acts. These include COFEPOSA, FEMA, PMLA, and FEOA. Each of these Acts carries its own unique set of responsibilities for the ED, from investigating suspected contraventions of foreign exchange laws and regulations under FEMA, to executing provisions under PMLA, to attaching properties of fugitive economic offenders under FEOA.
Issues Related to ED
Several concerns have surfaced around the operations of the ED. These include misuse of power, lack of transparency, and potential political bias. There has been a history of allegations suggesting the ED’s powers were used to target political opponents, with investigations leading to media trials tarnishing reputations. Moreover, the ED has also been accused of allowing favorable treatments to individuals affiliated with the ruling party.
Improvements Needed
While the ED holds significant power under PMLA, it is essential to ensure these powers do not become tools for political manipulation. Swift resolutions, transparency, and fairness in trials and convictions are needed to combat corruption effectively. Rather than extreme measures, systemic fixes in government agencies’ operations are necessary to reduce corruption dramatically.