Govt may look to reduce ED’s cost of attachments

The government is discussing amendments to the Prevention of Money Laundering Act (PMLA) to give relief to Enforcement Directorate (ED) that annually spends over ₹50 crores in maintaining the properties and assets it has attached over the years.

Various solutions are being discussed between ED and the finance ministry, including auctioning the assets and keeping the money as deposit with the government, which will be returned if a court decides the case against the agency.

There are no provisions under PMLA to auction confiscated assets before the cases are disposed, so as to protect the interest of owner of these assets.

“The owner of the attached assets could be given right of first refusal when we auction them, this money will be kept as deposits and we could look at the option of returning it with interest, if we lose the case,” said an officer in ED, who did not wish to be named.

Since PMLA came into effect in 2005, ED has attached assets and immovable properties around ₹30,000 crore, but they cannot be monetised and courts take years to decide the cases. So there are issues of encroachment on seized land, payment of rent to warehouses where valuable seized items are housed and also the issue of devaluation of these assets. As far as assets such as cars, paintings etc. are concerned, ED uses warehousing facilities provided by the Central Warehousing Corporation, a public sector enterprise.

“But they charge us rent, which goes into crores given the years and space we use for storing attached assets,” said a second official in ED. ED has to ensure the asset’s upkeep so that after a case is dissolved, it is in a conditioned to be auctioned to generate revenue and the asset has not lost its value.

The government is also talking to National Building Construction Corporation (NBCC) to maintain immovable properties, as ED has to continuously pay for their upkeep. There is no provision under PMLA to rent out houses and buildings frozen by ED. The worth of properties and assets confiscated by ED has increased exponentially over the years, from close to ₹14,000 crore in March 2015, it has gone upto ₹23,000 crore at the end of December 2017 to about ₹30,000 crore by the end of March 2018.

In past few years, ED’s biggest hauls have been attachment has been in the Vijay Mallya case (₹9,600 crore), PNB scam (₹7,700 crore) and Sterling Biotech loan fraud (₹4,700 crore)

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