PARTICIPANTS’ PAPERSEFFECTIVE USE OF INTERNATIONAL COOPERATION AT THE
INVESTIGATION STAGE IN PREPARATION FOR ASSET RECOVERY
AND FRAMEWORKS FOR INTERNATIONAL COOPERATIONVirender Mittal*

I. CURRENT SITUATION AND GOOD PRACTICESThe Government of India, being signatory (ratified on 09/12/2005) to the United Nations Convention
against Crime (UNCAC), is committed to International Cooperation in corruption cases in terms of its Article
43 to Article 50. Further, India is also a member of INTERPOL and the Financial Action Task Force whichpromotes effective implementation of legal, regulatory and operational measures in Members States. TheGovernment of India has amended or enacted various statutes including the Prevention of Money Laundering
Act for effective implementation of asset recovery.  It has also set up administrative and judicial mechanisms
for effective and speedy implementation of requests received for international cooperation including
confiscation of properties acquired through proceeds of crime and return of the same to the requesting
States.  In terms of Article 51 of UNCAC regarding Asset Recovery, India is committed to affording thewidest measure of cooperation and assistance including return of assets.
The Government of India has adopted several good practices and has been a pioneer in developing arobust judicial system for international cooperation in investigation of criminal cases and attachment andforfeiture of properties acquired through the process of crime committed beyond Indian boundaries. The
important mechanism / statutes applicable in India qua Asset Recovery and international cooperation may
be highlighted as below:•The Code of Criminal Procedure was amended from time to time to include Provisions under section
166-A which deals with Letter of Request to the Competent Authority for investigation in a country
or place outside India. Further, provisions under section166-B of the Code provides for Letter ofRequest from a country or place outside India to a court or an authority for investigation in India.
Provisions under section 105 of the Code have been amended for reciprocal arrangements for assistancein certain matters and procedure for attachment and forfeiture of property within a contracting State,i.e. any country or place outside India.1 The Ministry of Home Affairs, Government of India, acts as aCentral Agency and all such requests are routed through it.2•

The Prevention of Money Laundering Act, 2002 (Chapter-IX) has been fully devoted to such reciprocalarrangements for assistance and forfeiture of properties, including assistance for the transfer ofaccused persons.3•

The Fugitive Economic Offender Act, 2018 (Section 12) deals with confiscation of the properties, andcourts are empowered to declare an individual a fugitive economic offender and confiscate theproperties.4•

The Lokpal and Lokayuktas Act, 2013 deals with corruption-related issues of the public servantscommitted within India or outside India. The Act contains provisions for attachment / confiscation of* Superintendent of Police, Anti-Corruption Branch, Central Bureau of Investigation, India.
1
https://www.indiacode.nic.in/handle/123456789/16225?sam_handle=123456789/13622
https://www.mha.gov.in/en3
https://www.indiacode.nic.in/handle/123456789/2036?sam_handle=123456789/13624
https://www.indiacode.nic.in/handle/123456789/4035?view_type=search&sam_handle=123456789/1362

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assets, proceeds, receipts and benefits arisen or procured by means of corruption.5
Besides the Narcotics Drugs and Psychotropic Substance Act-1985 (sections 68A,68E,68F,70C), theCustoms Act (sections 28BA,127D), the Smuggler and Foreign Exchange Manipulator (Forfeiture of Property)
Act-1976 (sections 6,7) and the Unlawful Activities (Prevention) Act-1967 (sections 24,26,33,43) also containprovisions for attachment, forfeiture, confiscation and recovery of stolen assets both in India and outside.6
In terms of Article 52 of UNCAC, India is committed to prevention, detection and transfer of proceeds ofcrime. The Reserve Bank of India which is the central bank of Government of India and the Regulatory
Authority for all the banks and Non-Banking Financial Institution of India, has been issuing circulars /directions from time to time to verify the identity of the customers and to take reasonable steps to determine
the identity of beneficial owners of funds deposited into high value accounts. There are sufficient regulationsin India, including the Code of Conduct, which make it obligatory for public servants / Government servants
to disclose high value financial transactions including any transaction with a foreigner, foreign government
or foreign organization.
In terms of Article 53 of UNCAC, the Government of India has enacted several statutes for direct
recovery of property.
•The Civil Procedure Code of India permits foreign State parties to file civil suits in Indian courts when
the defendant resides in India or the cause of action arises in India.

•The Criminal Procedure Code of India (Section 357) empowers courts to direct payment of compensation
to any person for any loss or injury caused by the offence.

•The Prevention of Money Laundering Act, 2002, provides for attachment, seizure and confiscation etc.
of property in contracting states and India.

In terms of Article 54 of UNCAC, i.e. Mechanisms for recovery of property through international
cooperation and confiscation, the Ministry of Home Affairs, Government of India, is notified as the Central
Agency to receive such requests and decide the Competent Authority which may give effect to the request.
The Ministry has issued comprehensive guidelines for dealing with Mutual Legal Assistance requests. Someof the statutes enacted in India dealing with the matter include the Prevention of Money Laundering Act,
2002, the Narcotics Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act,
1967, the Customs Act and the Smugglers & Foreign Exchange Manipulation Act, 1976.  Bilateral Agreements
signed with different countries contain provisions for transfer of assets to requesting states.
In terms of Article 55 of UNCAC, i.e. International Cooperation for Purposes for Confiscation, Indian law
fully provides international cooperation for confiscation. In such cases also, the Ministry of Home Affairs acts
as the Central Authority for incoming requests and gets them executed through International Police
Cooperation Cell (IPCC) under the Central Bureau of Investigation (CBI).
In terms of Article 56 of UNCAC, i.e. “Special Cooperation”, there is no bar to transmit to another stateparty, with prior request, information which may be relevant for that party for initiating or carrying out
investigations or prosecutions of judicial proceedings. India is a Member of INTERPOL, the Egmont Group,
the G20 Anti-Corruption Working Group, the Global Cooperation Network of Anti-Corruption Law
Enforcement Authorities etc. There has been regular exchange of information through these channels.
Besides, International Police Liaison Officers located in foreign missions in India also provide input regularly.
In terms of Article 57 of UNCAC, i.e. “Return & Disposal of Assets”, the Indian Standard Draft for Treaty
on Mutual Legal Assistance (the principle guiding document) has been recently revised. Its Article 195

https://www.indiacode.nic.in/handle/123456789/2122?sam_handle=123456789/1362
https://www.indiacode.nic.in/handle/123456789/1791?sam_handle=123456789/1362  https://www.indiacode.nic.in/handle/123456789/2475?view_type=browse&sam_handle=123456789/1362  https://www.indiacode.nic.in/handle/123456789/1490?view_type=browse&sam_handle=123456789/1362  https://www.indiacode.nic.in/handle/123456789/1470

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provides that the requested State shall return the seized or confiscated assets, after deducting any cost ofrealization to the requesting State. The Government of India has been proposing this provision for incorporation
into the Treaties on Mutual Legal Assistance which are being negotiated with other countries. TheGovernment of India is guided by the provisions of bilateral agreements or mutual agreements or on theprinciple of reciprocity on case-by-case basis.
In terms of Article 58 of UNCAC, the “Financial Intelligence Unit” was set up by Government of India inthe year 2004 as the Central National Agency responsible for receiving, processing, analysing and disseminating
information relating to suspected financial transactions. It is also responsible for coordinating and strengthening
efforts of national and international intelligence, investigation and enforcement agencies in pursuing global
efforts against money-laundering.
In terms of Article 59 of UNCAC, i.e. “Bilateral & Multilateral Agreements”, India has been continuouslyengaging with the other State parties for entering into bilateral Mutual Legal Assistance Treaties /Agreements. India has so far entered into such agreements with 45 countries. These treaties have appropriate
provisions for confiscation of proceeds of crime and disposal of the same on the requests of the requesting
States.7

II. CASE STUDYThe Central Bureau of Investigation (CBI) has been investigating various corruption-related cases having
international ramifications. One of such cases pertaining to allocation of 2nd Generation (2G) Spectrum tovarious telecom companies was investigated by the CBI. A number of applicant companies including jointventures with foreign companies, viz. Telenor (Norway) and Etisalat (UAE), applied for the said 2G Spectrum
licenses.
Investigation revealed huge foreign remittances in various companies holding the applicant companies.
Such holding companies were registered or situated in foreign countries, viz. Republic of Mauritius, Isle ofMan (United Kingdom), Republic of Singapore, Cyprus, Switzerland, France etc. Further, some of suchcompanies were financed by mutual funds based in Switzerland etc.  It was suspected that proceeds of crime
through corruption were laundered, routed or parked outside India through these companies.
In order to ascertain the ultimate beneficial owner of such foreign entities, source their funding, recoverassets etc., letters rogatory (LRs) were sent to different countries including Republic of Mauritius, Republicof Singapore, Isle of Man (United Kingdom), Switzerland, France, Cyprus etc.
One such LR was sent to the Republic of Mauritius on 4 January 2011 and 18 May 2011 to ascertain theultimate beneficiary of equity shares of M/s. Swan Telecom Pvt. Ltd. (applicant company) purchased by M/s.
Delphi Investments Ltd., Mauritius from M/s. Reliance Telecom Ltd. for USD 4 million (suspected to proceedsof crime). The information was sought from the office of the Registrar of Companies, Financial ServiceCommission, Mauritius, office of concerned companies, foreign banks etc.
The execution report was received on 20 June 2011. However, it did not contain any useful information
to ascertain the ultimate beneficiary of said equity shares. The supplementary LR was sent on 20 October
2012 with some additional information. The second execution report was received vide letter dated 18 April
2017, i.e. after a gap of about five years.
The execution report did not contain any information or document from any office except the Registrarof Companies, Mauritius. Scrutiny of the execution report revealed that the status of M/s. Delphi Investment
Ltd., Mauritius (wholly owned subsidiary of M/s Mavi Investment Fund Ltd., Mauritius) was changed from
“Close Ended Fund” to “Open Ended Fund” and the class of shares other than founder shares were allottedby M/s. Mavi to various companies. However, the class of such shares and addresses of the allottees werenot available. Further, the details of investments by M/s. Mavi into M/s. Delphi were also not available in7

https://www.unodc.org/unodc/en/corruption/uncac.html

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the execution report. As such, the letter rogatory process continued for about five years and still theexecution report did not contain sufficient information which could be helpful in detecting the ultimate
beneficiary of proceeds of crime through corruption.

III. CHALLENGESThe Government of India and its investigating/law enforcement agencies have been facing challenges inrespect of international cooperation in corruption-related matters and recovery of assets. Some of thechallenges faced recently may be highlighted as below:•There are barriers to domestic as well as international cooperation.  Letters rogatory issued by Indian
Courts to foreign countries in corruption-related matters are either pending for long time or are
executed in piecemeal.

•There is ineffective case strategy and case management. Ambiguity in understanding the issue andqueries raised time and again by the Member States further delays the execution. The delay offers
opportunity to the suspected persons (beneficiary of proceeds of crime) to remove evidence and assuch hinders the recovery of the assets generated through proceeds of crime.

•Inadequate laws and immunity enjoyed by the officials of a Member State is another impediment.
Further, there are jurisdictional issues and statutes of limitations in entertaining requests forinternational cooperation.

•In criminal cases, there are challenges regarding admissibility of the evidence collected, and it isdifficult to obtain conviction based on such evidence.

•Extradition of fugitives from foreign countries is delayed due to protracted proceedings.

•Recovery of laundered assets parked in foreign accounts, especially in tax haven countries, issignificantly delayed.

•Different notices issued under the provisions of INTERPOL to trace out and nab the offenders arepending for a long time.

IV. COUNTERMEASURES AND POSSIBLE SOLUTIONS
Some of the countermeasures and possible solutions to the challenges in effective executions of request
for international cooperation may be discussed as below:

50•

On the issue of lack of cooperation and case management, an effective case management system bydeveloping case strategy, gathering of facts and establishing an agreement with foreign counterparts
may be explored, as well as the possibility to undertake joint investigation with foreign authorities.

•To address legal issues and obstacles, it may be ensured whether adequate and effective legal
frameworks are in place, both domestically and in relevant foreign jurisdictions.  It may be ensured
that confiscation of proceeds of crime is legally permissible, and issues of immunities enjoyed byofficials may also be addressed.

•In “common law countries”, the required proof for conviction is “beyond a reasonable doubt” while for
confiscation the required proof is “preponderance of probability”, whereas in “civil law countries” thestandard of proof is the same for conviction as well as confiscation. Therefore, the “standard of proof”
may be made uniform to enhance admissibility of evidence gathered through international cooperation.

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Subject to domestic laws, Members States may sign bilateral agreements, mutual legal assistancetreaties etc. which would be binding on the contracting parties and would facilitate speedy andeffective cooperation in corruption-related matters including recovery of assets.

•The format of letters rogatory, Competent Authority in Member States etc. may be standardized toavoid any ambiguity and avoid repeated queries.

•Subject to domestic laws, if feasible, time frames may be fixed for speedy execution of the request.

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