ED initiates probe in BBC India’s alleged foreign exchange violations

The Enforcement Directorate has initiated an inquiry into the British Broadcasting Corporation (BBC) India under the Foreign Exchange Management Act (FEMA) for suspected violations.

• The move came about two months after the Income-Tax Department had surveyed the Delhi and Mumbai office of the BBC, which allegedly revealed multiple irregularities, including non-payment of tax on certain remittances that were not disclosed to the authorities as income in India.
• The Income-Tax Department had then said that the income/profits shown by various group entities were not commensurate with the scale of operations in India.

The British Broadcasting Corporation (BBC):

• British Broadcasting Corporation (BBC) publicly financed broadcasting system in Great Britain, operating under a royal charter.
• It held a monopoly on television in Great Britain from its introduction until 1954 and on radio until 1972.
• Headquarters are in the Greater London borough of Westminster.
• The British Broadcasting Company, Ltd. was established in 1922 as a private corporation, in which only British manufacturers were permitted to hold shares.

Role of Enforcement Directorate (ED):

• It was established as an ‘Enforcement Unit’ in 1956 under the Department of Economic Affairs, for handling Exchange Control Laws violations under the Foreign Exchange Regulation Act (FERA).
• Today, the Directorate of Enforcement is a Multi-Disciplinary Organizationmandated with the task of enforcing the provisions of two special fiscal laws – the Foreign Exchange Management Act, 1999 (FEMA) and the Prevention of Money Laundering Act, 2002 (PMLA).
• Powers:
• Whenever any offence is registered by a local police station, which has generated proceeds of crime over and above Rs.1 crore.
• The ED can also carry out search (property) and seizure (money/documents) if it suspects money has been laundered.
• Since the PMLA was enacted only in 2005, any ill-gotten property acquired before the year 2005 has no case under PMLA.
• Functions:-
  • To collect, develop and disseminate intelligence relating to violations of FEMA, 1999, the intelligence inputs are received from various sources such as Central and State Intelligence agencies, complaints etc.
  • To investigate suspected violations of the provisions of the FEMA, 1999 relating to activities such as “hawala” foreign exchange racketeering, non-realization of export proceeds, non-repatriation of foreign exchange and other forms of violations under FEMA, 1999.
  • To adjudicate cases of violations of the erstwhile FERA, 1973 and FEMA, 1999.
  • To realize penalties imposed on the conclusion of adjudication proceedings.
  • To handle adjudication, appeals and prosecution cases under the erstwhile FERA, 1973
  • To process and recommend cases for preventive detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA)
  • To undertake survey, search, seizure, arrest, prosecution action etc. against offenders of PMLA offence.
  • To provide and seek mutual legal assistance to/from contracting states in respect of attachment/confiscation of proceeds of crime as well as in respect of transfer of accused persons under PMLA.

Legal Backing:

• As per the Prevention of Money Laundering Act, the ED got its power to investigate under Sections 48 (authorities under the act) and Section 49 (appointment and powers of authorities and other officers).
• If money has been laundered abroad, the PMLA court (constituted as per the Act) has the right to send a letter of rogatory under Section 105 (reciprocal arrangements regarding processes) of the Code of Criminal Procedure.