The Mumbai Enforcement Directorate (ED) could not arrest Pune businessman Hasan Ali Khan in the last four years as it had a very weak case against him under the Prevention of Money Laundering Act (PMLA).
The Supreme Court had, on Thursday, blasted the Centre for not interrogating Khan and others in custody for hoarding black money.
The ED had initially booked Khan under the Foreign Exchange Management Act (FEMA) soon after the income tax (I-T) department conducted searches on him in January 2007 and found a laptop showing Khan holding an account in a Swiss bank that had a balance of US$8 billion (equivalent to Rs 36,000 crore in January 2007 when the case first came to light).
However, FEMA being a toothless Act, ED had no power to arrest him. The agency initially failed to book Khan under PMLA, as it could not prove that the black money he was holding was the proceeds of a crime (see box for definition of money laundering) that is the main criterion for applying the Act.
The Act lists certain scheduled offences and a person earning black money committing any of these offences could be booked under PMLA.
ED applied PMLA on Khan only in 2009 much after the Mumbai police booked him for cheating and passport forgery. Cheating and forgery are listed as scheduled offences in PMLA.
The police had charged Khan in February 2008 for possessing multiple passports. However, ED only applied PMLA after the Supreme Court, in May 2009, questioned why Khan was not booked under the Act (PMLA).
An ED official, requesting anonymity as he is not authorised to speak to the media said though PMLA was applied using the passport forgery case, the agency had so far not been able to prove that it was because of this (passport forgery) that Khan earned the black money that was stashed in the Swiss bank.
“We did not arrest him, as we would not have got custody of him because it is difficult to prove that the black money was earned using passport forgery,” the officer said.
Following the recent firing by the Supreme Court, the ED is in a dsilemma whether to arrest Khan or not, as there is no change in the situation.
ED officers said that since it could not be proved that the amount was proceeds of crime, the Swiss authorities have refused to give entire details of Khan’s acco-unt and transactions taken place.