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Power Play/ Rajiv Shukla

Government to drop accounts falsification section from Money Bill

Although industry and business circles are protesting against various provisions of the Prevention of Money Laundering Bill, mandarins in the ministry of finance have made up their mind to dilute it by dropping the section dealing with the falsification of account.

Finance Minister Yashwant Sinha and secretaries in the ministry are of the opinion that opposition to the Section concerned (477A) is justified and government may accede to the request to delete it.

In fact, when the Bill was being sent to the Union Cabinet for approval, both then finance secretary Montek Singh Ahluwalia and then revenue secretary N K Singh expressed their reservations about Section 477A, but officials in the Enforcement Directorate were rigid about the clause.

Later, most of the members of the Cabinet expressed their opinion that government should not take a lenient view towards economic offenders. Keeping these observations in mind, Sinha went ahead with the Bill originally prepared by his predecessor P Chidambaram, and tabled it in the Lok Sabha.

The finance ministry was already expecting tremendous resentment from business and industry over the Bill. It was decided in a meeting of the top brass of the finance and revenue departments that the government should withdraw the provision but only after protests and opposition to the Bill are voiced.

Now the department of revenue and Sinha have received several memoranda and delegations opposing the stringent provisions of the Bill. Industrialists and businessmen are saying that offences under the proposed law should not be made non-bailable, that provisions related to falsification of accounts are so vague that any businessman can be booked under this offence if any official wants to harass him.

The Bill is basically against smugglers, drug traffickers and terrorists, but because of certain provisions officials can misuse it to harass innocent businessmen and industrialists. Instead of giving comfort to the business community, the Bill will make their life miserable as it will be used as a tool against them, the government was told.

Business organisations are of the view that several non-economic offences have been labelled as economic offences in the Bill, increasing the chances of harassment of businessmen.

It is also felt that if the Bill passes in its current form, it would only become a weapon in the hands of very zealous and corrupt officers to harass honest citizens, especially businessmen and industrialists. This would jeoparadise the primary goal of checking money laundering. For rise in corruption at various levels would only lead to generation of more black money.

Another view is regarding falsification of accounts. I feel the income tax department is empowered enough to deal with this. Handing over this work to a separate agency will undermine the importance of the IT department.

The current Income Tax Act includes provisions that seem to be duplicated in the Prevention of Money Laundering Bill. The new Bill is also going to create problems for executives of various banks and financial institutions. Their role is going to be more like informer and inspector than bank manager and financial experts even as the Enforcement Directorate gets fresh power to catch hold of officials of banks and financial institutions.

Although senior officers of the finance ministry are still going through various complaints by several fora of businessmen, it has been decided that except for provisions related to falsification of accounts, the Bill will not be reviewed.

It is true that the government will have to get the Bill through because of the UN resolution and other international commitments. But agreeing on enacting a law to tackle smugglers, drug traffickers and terrorists is one thing and creating problems for genuine businessmen, industrialists and bankers quite another.

The present Bill it seems is more concerned about business transactions than the money involved in smuggling terrorism and narcotics. In fact, officials in the Enforcement Directorate are quite worried after the Bill of Foreign Exchange Management Act was drafted.

The provisions of FEMA are being welcomed by all the quarters of society, but officials of the Enforcement Directorate are finding their organisation a toothless body. Now in a bid to make it more powerful after the FEMA comes into effect, they have made provisions of Prevention of Money Laundering Bill more stringent.

Rajiv Shukla