Tamil Nadu: Two wings better for land of Emu

The Economic Offences Wing (EOW) of the Tamil Nadu Police is adopting new methods to collect information on economic crimes from the vigilant public and act proactively in these cases.

Till recently, EOW-II, set up to investigate cases against non-banking financial companies (NBFCs) and unincorporated financial establishments, registered 1,668 cases, in which 1,310,354 depositors had deposited a sum of Rs 3,782.03 crore. Of this, Rs 1,340.39 crore was repaid to 698,275 depositors (full settlement), according to EOW data.

EOW-II was established after a high court order related to a major financial scam here about 15 years ago, when thousands of depositors filed complaints against a company called Anubhav, for non-refund of their deposits.

MONEY BIRDS:

Time to solve a case: 3-4 years
Longest: Anubhav (1998; 31,342 claims, 2077 prosecution witnesses, Rs 100 crore settled, 100 per cent recovery, Rs 7 crore to be settled, Rs 22 crore liquidation is available)
Recent widely spoken case: Emu scam, runs in multiple crore and 100s of people were cheated in Southern Tamil Nadu
Most recent case: Fine Future firm, an online multilevel marketing portal (default amount Rs 185 crore, 25,000 depositors, Rs 80 crore assets were obtained)
Achievement of EOW: In 2013 (up to September) an amount of Rs 33.14 crore was refunded to 3,201 depositors fully and part settlement to 1,45,472 depositors. The refund position for the last Seven years is given below:

Speaking to Business Standard, Prateep V Philip, additional director-general of police, EOW, said, “Earlier, the wing was reactive---we reacted after a complaint was received. Now, we are proactive---we don’t wait for complaints to act.”

  EOW has launched various initiatives, the most recent one being the Friends of Police (FoP) Scambusters scheme. The scheme, launched by Philip about three months ago, was aimed at cracking the whip on fake NBFCs, with the support of the public, representatives of financial establishments, including retired bank officers, insurance companies and volunteers from colleges (both faculty and students).

Philip said the scheme was the first of its kind and was operational across every city and district in the state. “This (the FOP Scambusters scheme) helped us prevent economic frauds,” Philip said, adding six companies in Villipuram, Madurai and Tiruchy districts were closed within days.

EOW, along with Indian Institute of Technology (IIT)-Madras, is also in the advanced stages of launching software to help the public evaluate financial schemes. The software is being developed by Ashok Jhunjhunwala, professor at the department of electrical engineering, IIT-Madras, and his team. The agency has also brought out the EOW Crime Map, which points to the particular economic offences in various areas/districts.

“Thankfully, we don’t have any resource constrains, be it human resource or financial ones,” says Philip. The agency’s coverage of all districts in the state is aided by the Commercial Crime Investigation Wing (CCIW), set up 1971. A part of EOW, CCIW has 21 units across various districts, while EOW-II (financial institutions) has 16 units.

Philip said a major challenge for the agency was procedures related to attachment of properties of a person or company involved in fraud. This, he added, was one of the reasons for the decline in refunds. Between July and October, the number of cases reported stood at 31, while the default amount was Rs 403.36 crore (including that for previous cases), Philip said. The number of depositors was 91,945 and the amount refunded stood at Rs 19.01 crore. While 2,141 depositors were fully refunded, 802 received partial refunds. Properties worth Rs 10.37 crore were attached.

One of the major cases probed by the Tamil Nadu EOW was the emu scam, in which some farms had collected huge sums of money from the public and farmers across Erode, Namakkal, Salem, Tiruppur, Coimbatore, Dindigul, Karur, Sivaganga, Trichy and Tirunelveli districts, as well as a few other areas in the state.

Philip says when it comes to attachment of assets and auctions, legal procedures take time. Also, the paperwork involved is huge, as an increasing number of complaints and complex cases mean thousands of pages of reports. Every five years, a new set of economic offences is reported and so, training is another crucial factor, Philip says, adding the EOW is considering engaging forensic auditors, as the nature of the crimes is increasingly becoming complicated.