 "SFIO to get statutory status, more powers")
Serious Fraud Investigation Office (SFIO), which recently finalised its investigation report on the Reebok case, is again back in action as it starts probing into illegal money-pooling activities of various entities mainly operating out of West Bengal, Odisha, Bihar and Assam.
The latest case, triggered by the controversy over Kolkata-based Saradha group allegedly duping investors, will have SFIO initially focus on 57 companies based out of these states.
Officials said SFIO will start with seeking available data from the Registrar of Companies (RoC), which has already conducted initial inquiry into such companies and have gathered a lot of alarming data. The agency will then further probe into operations of such companies.
Apart from the alleged fraud of Rs 870 crore in Adidas AG’s Indian subsidiary - Reebok India, Singapore-based SpeakAsiaOnline and nine companies of the Radia group, including Vaishnavi Corporate Communications and Neucom Consulting, were also referred to the agency by MCA after RoC found alleged inconsistencies in their financial accounts.
According to Minister for Corporate Affairs Sachin Pilot, as many as 64 cases were referred to SFIO in three financial years starting 2008-09. Out of this, the agency has completed examination in 55 cases including Sesa Goa Industries, Ambuja Cements, Ultratech Cement and DSS Mobile Communications.
However, the role of SFIO is not limited to monitoring just companies. The fraud investigative arm of the government also safeguards public interest by keeping an eye on money laundering and monetary misappropriation. This includes probe of investor frauds, disappearing companies and cartelisation by firms.
Since inception, it has probed several complex cases, including the Ketan Parekh scam. The agency was also a whistle blower in case of cartelisation by major cement firms, a case that was later referred to the Competition Commission of India for prosecution. SFIO was set up following various stock market scams, irregularities in non-financial banking companies and vanishing plantation companies. The idea behind its inception was to tackle white-collar crimes, especially those committed on a large scale or involved great complexity.
However, some feel the agency lack teeth and adequate resources to intimidate companies. With an increase in economic activity in the country, such frauds are also likely to increase manifold and the government therefore need to improve the system in order to put enough checks and balances to avoid as well as detect such crimes, says Pavan Kumar Vijay, managing director, Corporate Professionals, a capital markets consultancy firm.
According to Vijay, though SFIO, with its multi-disciplinary team, is capable of investigating cases like chit funds etc, more power will enable it to execute them well and on time.
Though the Naresh Chandra Committee had recommended a separate statute for SFIO, it continues to remain a body under the ministry of corporate affairs. Currently a non-statutory body, SFIO lacks legislative recognition.
Experts suggest that given the purview and scope of the required investigation, SFIO need more power for its mandate. “During the Satyam scam, SFIO found it difficult to secure court approvals to interrogate suspects or carry out searches,” one of the experts said.
However, the government says the new Companies Bill, awaiting Rajya Sabha approval, will adorn SFIO with various powers, enabling the agency to become more aggressive and effective in its functioning. Officials said, the new Bill would enable SFIO to seize property and assets and conduct investigations independently. It would also empower it to interrogate anyone outside the country.
Currently, the investigative agency takes up a case only when it is referred to it from the administrative ministry or from the judiciary; the new law would enable it to take up investigations on its own accord.
The latest case, triggered by the controversy over Kolkata-based Saradha group allegedly duping investors, will have SFIO initially focus on 57 companies based out of these states.
Officials said SFIO will start with seeking available data from the Registrar of Companies (RoC), which has already conducted initial inquiry into such companies and have gathered a lot of alarming data. The agency will then further probe into operations of such companies.
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Established in 2003 on the basis of recommendations of the Naresh Chandra committee on corporate governance and known best for its probe into the Satyam financial scam in 2009-10, the corporate fraud investigative wing of Ministry of Corporate Affairs (MCA) has so far dealt with various other high profile cases.
Apart from the alleged fraud of Rs 870 crore in Adidas AG’s Indian subsidiary - Reebok India, Singapore-based SpeakAsiaOnline and nine companies of the Radia group, including Vaishnavi Corporate Communications and Neucom Consulting, were also referred to the agency by MCA after RoC found alleged inconsistencies in their financial accounts.
According to Minister for Corporate Affairs Sachin Pilot, as many as 64 cases were referred to SFIO in three financial years starting 2008-09. Out of this, the agency has completed examination in 55 cases including Sesa Goa Industries, Ambuja Cements, Ultratech Cement and DSS Mobile Communications.
However, the role of SFIO is not limited to monitoring just companies. The fraud investigative arm of the government also safeguards public interest by keeping an eye on money laundering and monetary misappropriation. This includes probe of investor frauds, disappearing companies and cartelisation by firms.
Since inception, it has probed several complex cases, including the Ketan Parekh scam. The agency was also a whistle blower in case of cartelisation by major cement firms, a case that was later referred to the Competition Commission of India for prosecution. SFIO was set up following various stock market scams, irregularities in non-financial banking companies and vanishing plantation companies. The idea behind its inception was to tackle white-collar crimes, especially those committed on a large scale or involved great complexity.
However, some feel the agency lack teeth and adequate resources to intimidate companies. With an increase in economic activity in the country, such frauds are also likely to increase manifold and the government therefore need to improve the system in order to put enough checks and balances to avoid as well as detect such crimes, says Pavan Kumar Vijay, managing director, Corporate Professionals, a capital markets consultancy firm.
According to Vijay, though SFIO, with its multi-disciplinary team, is capable of investigating cases like chit funds etc, more power will enable it to execute them well and on time.
Though the Naresh Chandra Committee had recommended a separate statute for SFIO, it continues to remain a body under the ministry of corporate affairs. Currently a non-statutory body, SFIO lacks legislative recognition.
Experts suggest that given the purview and scope of the required investigation, SFIO need more power for its mandate. “During the Satyam scam, SFIO found it difficult to secure court approvals to interrogate suspects or carry out searches,” one of the experts said.
However, the government says the new Companies Bill, awaiting Rajya Sabha approval, will adorn SFIO with various powers, enabling the agency to become more aggressive and effective in its functioning. Officials said, the new Bill would enable SFIO to seize property and assets and conduct investigations independently. It would also empower it to interrogate anyone outside the country.
Currently, the investigative agency takes up a case only when it is referred to it from the administrative ministry or from the judiciary; the new law would enable it to take up investigations on its own accord.