Serious Fraud Investigation Office (SFIO) should be given exclusive jurisdiction to probe and prosecute entities involved in financial frauds, the Vepa Kamesam Committee report has said.
The eight-member committee, which submitted its report recently to the corporate affairs ministry, was constituted in 2006 to review and decide on future course of action of SFIO, which was set up to function as an investigating arm of the ministry.
The report, according to the sources in the Committee, took into account the multi-crore rupee Satyam scam, which shook the corporate world.
According to the report, SFIO should be the nodal agency and it should be given prosecution power with a legislative backing.
It will also be given power to prosecute not only corporates involved in fraud, but also related erring entities/individuals like chartered accountants and company secretaries.
SFIO is a multi-disciplinary organisation that looks into serious financial frauds committed in the country. The committee has favoured that the organisation should be given more teeth as, at present, the investigating arm does not have powers to prosecute. It has to take the nod of the ministry before it can file fraud case.
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The committee is of the opinion that power of search and seizure, attachment should be entrusted to SFIO as available with the Income Tax authority, customs, Enforcement Directorate etc.
The committee further suggested that SFIO should be empowered to take up a case sou moto and even on a source-based information if a corporate fraud has been committed.
SFIO should also have the flexibility to outsource the services of experts like chartered accountants, legal experts etc and officers joining the investigating agency on deputation should be ensured protection of their existing pay and allowances, the committee said.
Sources said after the Satyam scam, the committee incorporated certain changes in the report and “earlier we had doubts whether full powers should be given to SFIO or not, but after Satyam we thought it should be there”.
Demanding recognition of SFIO and definition of fraud in the Act, the committee said that the agency should have powers to investigate persons and funds outside India.
Also, the government should specify the offences and penalties to enable effective conduct of investigating agencies, the committee has suggested.