A video of Lalit Modi (the founder of the cricket carnival, IPL) attending Vijay Mallya’s lavish 70th birthday bash in London went viral a few days ago, in which he was heard saying, “We are the two fugitives, the biggest fugitives of India.” He has since apologised—whether in contrition or just for form’s sake, nobody knows. The third biggest fugitive, Nirav Modi of the PNB scam, wasn’t on hand, obviously, because in December 2022, he lost his final appeal against an extradition request by Indian agencies and hence is lodged in a jail pending a decision on his request for political asylum by the UK government.
Why London becomes a haven
London attracts fugitives, especially from India, due to its strong rule of law, adherence to the Human Rights Act, and a legal system that can significantly delay extradition. This allows offenders to exploit loopholes by claiming political persecution or poor prison conditions, including torture or risk of death back home, effectively creating a temporary safe haven despite extradition treaties. The high costs and lengthy appeals process in UK courts further stall return, making it a preferred destination for economic offenders and criminals.
With shared legal roots from the British era, Indian fugitives and their UK-based lawyers understand the system well, giving them an advantage in fleeing to London. Nirav Modi, for example, has made a virtue of his self-certified suicidal tendencies to ward off Arthur Road jail in Mumbai. His partner in crime and uncle, Mehul Choksi, however, committed the mistake of fleeing to the Caribbean and is grappling with Belgian authorities. He ought to have listened to his nephew.
Fugitive tag and political fallout
The dubious honour of being declared a fugitive under the newly minted Fugitive Economic Offenders Act, 2018, however, goes to Vijay Mallya, whose Kingfisher Airlines went belly up, unable to pay off the Rs 9,000 crore loan plus interest. While he did flee India in March 2016 under the watch—or lack of it—of the Narendra Modi government, Modi turned the tables on the Congress and mocked it for practising ‘phone banking’ long before its advent.
It is indeed a legacy issue, for which the Modi government’s riposte was the Fugitive Economic Offenders Act of 2018, which swears by the hit-where-it-hurts adage. Latching on to it, Mallya says with injured innocence that now that the Indian government has impounded as much as Rs 14,000 crore of his assets in India, the case for his extradition should be thrown out of the nearest window and the Indian courts should absolve him of all charges of non-repayment of bank loans. He conveniently forgets that while disgorgement is the remedy for financial crimes, he is also charged with crimes of money laundering and conspiracy. If he were to face trial in India, many heads may roll in addition. He may spill the beans and sing like a canary, much to the discomfiture of his collaborators and conspirators.
Global hypocrisy on black money
More than a decade ago, OECD members entered into a compact not to give a leg up to sham and dubious transactions that create black money abroad in defiance of domestic laws of the nations they belong to. Of course, it remains largely on paper, with funds continuing to flit from one country to another with a click of the mouse.
If Switzerland is unable to shake off the opprobrium of harbouring the wealth of sundry crooks and despots, thanks to its banking secrecy laws rooted in numbered accounts, the UK cannot shake off the charge of harbouring crooks and despots. London, along with Manhattan and Zurich, forms the international financial centre triad. The US, the UK and Switzerland control the world banking system and the bullion trade. How irresistible it must be for crooks to enjoy such cooler climes.
US pressure versus Indian helplessness
Switzerland, which frustrated the Indian government’s attempts to crack the alleged clandestine Bofors payoffs, meekly complied with US government orders. The US can obtain details of Swiss bank account holders through international agreements and laws like FATCA (Foreign Account Tax Compliance Act) and the US Anti-Money Laundering Act, 2020, which compel Swiss banks to share data on US persons with the IRS for tax compliance. These laws effectively ended strict banking secrecy for tax evaders and imposed penalties for non-compliant banks and clients.
The US Department of Justice and IRS have pursued criminal charges and imposed large fines against banks such as UBS and individuals, effectively ending the era of secret Swiss accounts for tax evasion, as vividly brought out by Paul Erdman in his novel The Silver Bears.
What India must do
Both Switzerland and the UK obviously view India as a pushover. Unless India becomes an economic powerhouse like the US, its crooks will continue to take sanctuary for their funds and persons in these countries. In the meantime, India should be at the forefront of forging a global alliance under the UN framework against harbouring crooks and their wealth.
Prevention is better than cure. Therefore, India must up its ante to foil wannabes’ attempts to flee the country. Prime Minister Narendra Modi must take this up with British Prime Minister Keir Starmer to clear the decks for the extradition of the fugitive trio—Mallya and the two Modis, Nirav and Lalit.
The writer, S. Murlidharan, is a freelance columnist who writes on economics, business, legal and taxation issues.
