Explained: The Birth And Evolution Of Enforcement Directorate As Indian State's Sword Arm

Dramatic scenes unfolded on Monday and Tuesday in Delhi and Ranchi as the Enforcement Directorate (ED) said Jharkhand Chief Minister Hemant Soren was untraceable and the Bharatiya Janata Party (BJP) claimed he was 'absconding'.

Those close to Soren, however, claimed there was a conspiracy against him and said he was in touch with the leadership of his party Jharkhand Mukti Morcha (JMM).

The ED on Monday reached the Delhi residence of Soren to question him in an alleged land fraud case. He was earlier questioned in the case on January 20. The ED, however, did not find Soren there and instead searched the premises for around 13 hours.

The ED seized about Rs 36 lakh in cash, a Haryana-registered BMW car under a 'benami' name and some "incriminating" documents, said sources to PTI.

Soren arrived in Delhi on Saturday in a chartered plane and his whereabouts since are not known. While the ED has said Soren is "missing", NDTV reported JMM General Secretary and Spokesperson Supriyo Bhattacharya as terming the ED action "uncalled for and unconstitutional". The party was further quoted as saying that Soren was safe and was in touch with the party leadership.

In a separate communication to ED, Soren said the ED was "motivated by political agenda" to disrupt the Jharkhand government's functioning and claimed that its insistence to record his statement again on or before Wednesday reeked of malice, according to PTI. He, however, also told the ED that he was available for questioning on Wednesday at 1 pm in Jharkhand's capital Ranchi.

The ongoing developments are, however, only the latest episode of ED's actions coming under criticism. In recent years, the ED has been at the helm of some of the most publicised investigations, such as the National Herald case, the alleged scam in West Bengal school recruitment, and the INX Media case in which Chidambrams are accused. 

While the Centre maintains these are genuine investigations, the Opposition has long claimed that these cases are the government's witch hunts of Opposition leaders for political benefit. However, complaints of investigative agencies' misuse pre-date Narendra Modi's government. In 2013, the Supreme Court infamously called the Central Bureau of Investigation (CBI) a "caged parrot speaking in its master's voice" in context of the Coal Scam investigation in which the apex court at the time noted that the "the heart of the report was changed on the suggestions of the government officials".

Since then, ED has taken primacy in the Union government's pursuit of corruption and allegations that CBI once faced are now levelled on ED. While CBI serves as the apex investigating police agency in the country, the ED follows the money trail. It's mandate is to check money laundering. However, the two organisations often work on a single case, such as in the West Bengal school recruitment case where CBI is investigating criminal aspects and ED is looking at the money laundering aspects.

Here we explain the history of ED, what it is its mandate, how it has taken primacy in recent years, and the politics and criticism around ED actions.

History of ED, evolution of ED's mandate 

The ED is mandated with the investigation of economic crimes and violations of foreign exchange laws. Its hierarchy, place in the government, and scope of work has evolved and expanded over the years.

It was founded as "Enforcement Unit" within the Department of Economic Affairs of Ministry of Finance in 1956. It was renamed as "Enforcement Directorate" in 1957. It originally handled Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 (FERA '47). 

Originally, it had its headquarters at Delhi and two branches at Bombay (now Mumbai) and Calcutta (now Kolkata). In 1957, another branch at Madras (now Chennai) was added. Now the organisation has expanded to have 39 zones, according to its organisational structure on its website.

In 1960, ED's administrative control was transferred to the Department of Revenue. Between 1973-77, ED was under the administrative jurisdiction of the Department of Personnel and Administrative Reforms. 

The nature of ED changed as India changed. In the pre-liberalisation era, the laws driving ED were "regulation" laws whereas post-liberalisation, those became "management" laws. Its website notes, "With the onset of the process of economic liberalization, FERA 1973 [which replaced FERA 1947], which was a regulatory law, was repealed and in its place, a new law viz. the Foreign Exchange Management Act, 1999 (FEMA) came into operation with effect from 1st June 2000."

The present mandate of ED

Presently, the ED deals with four laws:

1. The Prevention of Money Laundering Act, 2002 (PMLA): 

It is a criminal law to prevent money laundering and to provide for confiscation of property involved in money laundering.

2. The Foreign Exchange Management Act, 1999 (FEMA): 

It is a civil law dealing with foreign exchange market in India. "ED has been given the responsibility to conduct investigation into suspected contraventions of foreign exchange laws and regulations, to adjudicate and impose penalties on those adjudged to have contravened the law," as per its website.

3. The Fugitive Economic Offenders Act, 2018 (FEOA): 

This law deals with Indian offenders who leave India to escape laws. This allows ED to attach properties of fugitive offenders who have escaped India. 

4. Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)

The ED is the sponsoring agency under COFEPOSA. Under this law, the ED is empowered to sponsor cases of preventive detention with regard to contraventions of FEMA, according to its website. 

What makes ED so strong?

The Enforcement Directorate (ED) has a set of powers that CBI or state police forces don't have, making it the feared agency that it is.

These powers are:

1. Under PMLA which ED deals with, a statement recorded before an investigation officer (IO) is admissible in court as evidence. Statements to police are otherwise not admissible in court. Only statements recorded before a magistrate are admissible.
    

2. All offences under PMLA are non-bailable.
    

3. Unlike CBI or state police forces, the ED does not have its own lock-ups, so there are no special cells with ED for VIPs in its custody. People in ED custody go to the lock-up of the nearest police station, irrespective of its status, notes India Today. This means that VIPs being chased by ED don't have a shred of comfort when in custody.
    

4. It's very hard to retrieve property attached by ED. India Today notes, "Once the ED attaches the properties if an accused, it's often a long road to retrieve the attached asset."
   
   The Indian Express further explains how attachment can hurt. It reported, "Attached properties may remain locked for years, and may start crumbling...Attached vehicles are sent to warehouses owned by the Central Warehousing Corporation, where the ED pays to park the vehicle. As cases drag on for years, the vehicles rot."
    

5. The burden of proof is on the accused. Unlike regular criminal law, it is the accused —not the prosecutor— that has to furnish the proof under PMLA which ED deals with. Together with statements to ED's IO being admissible, this makes dealing with ED harder for accused.
   
   The Express explains, "Under the statute, if a person possesses a property that the agency can prove has been bought with the proceeds of a crime, it is not bound by law to prove that the person had an intention to launder money."

The ED track record

The year 2019 was the most steller year for Enforcement Directorate. The agency secured 11 convictions in eight months, as opposed to just three in the 2002-17 period, according to The Print.

However, despite such a strong set of laws backing ED, the ratio of cases being investigated and convictions secured is not in its favour. 

As per data published by The Express in September 2019, the ED had approximately 2,400 PMLA cases between 2005-19 and covictions were secured only in eight and investigation was pending in 898.

Of the cases under FEMA, ED had approximately 12,000 cases between 2005-19 and 6,944 were pending probe in September 2019.

ED becoming the Indian state's sword arm

The allegation against Enforcement Directorate (ED) that it has replaced CBI or Income Tax Department as state's swordarm stems from many cases that ED is pursuing against the ruling Bharatiya Janata Party's (BJP) political opponents. These figures range from Modi's bête noire Gandhi family to the leader closest to Mamata Banerjee — Partha Chatterje. 

It has been higlighted that ED becomes active before crucial elections. India Today lists multiple examples:

1. In the run-up to 2017 Uttar Pradesh assembly elections, the ED claimed to have detected Rs 104 crores in an account linked to Mayawati's Bahujan Samaj Party and Rs 1.5 crore to Mayawati's brother Anand Kumar. 

2. In January 2019 before the general elections, ED raided seven locations in UP in the Rs 1,400 crore Dalit memorials scam that took place during Mayawati's tenure as chief minister.

3. In August 2019, the ED went after former Haryana Chief Minister Bhupinder Singh Hooda and Motilal Vora over alleged irregularities related to the National Herald case. 

The ED has also gone after other BJP political opponents, such as nephew of Congress leader Kamal Nath and Robert Vadra, the son-in-law of Congress chief Sonia Gandhi. 

It has also been alleged that ED goes soft on BJP leaders or those who switch to BJP.

"Two examples cited are of Mukul Roy, who switched to the BJP from the TMC, and Himanta Biswa Sarma, who crossed over from the Congress. Roy and Sarma's names have come up in the Saradha chit fund scam, but the ED is yet to question them even as it has interrogated and charge-sheeted several TMC leaders," reported India Today in 2019.

Sarma is now BJP's CM of Assam. Roy has since returned to TMC's fold. He had been elevated to the post of national vice president in the BJP.

Allegations against ED predate Modi

Allegations of politically-motivated cases pre-date Narendra Modi's tenure, going way back to Manmohan Singh's tenure when P Chidambram was a powerful figure. Ironically, it was under Chidambram —who has himself been under the ED net in recent years— that the agency sharpened its fangs. 

The Express reported, "It was under Chidambaram that the ED began to frequently take up political cases and regularly hit headlines with actions in the Madhu Koda case, the 2G scam probe, the Aircel-Maxis case, the CWG case, the Sahara case, the Bellary mining case involving the BJP’s Reddy brothers, the Vanpic projects case involving Y S Jagan Mohan Reddy and cases against Baba Ramdev during the UPA regime."

Cases against Ramdev and his aide Balkrishna were shut down by the ED after BJP came to power in 2014. 

IANS in 2019 noted that tables had turned between 2010 and 2019 as Chidambram was going through what Amit Shah once went through.

"In 2010, when P Chidambaram was the home minister, the Central Bureau of Investigation (CBI) arrested and sent to jail BJP leader Amit Shah in connection with the Sohrabuddin Sheikh fake encounter case. Now, the 73-year-old Chidambaram is facing the toughest crisis of his career with Amit Shah as the home minister of India," reported IANS.

Shah was charged and arrested in the case but he was discharged in 2014.