Cases of Serious Fraud

Discovery of commission of offences like Corporate Frauds is primarily through investigations on complaints.  There is already a separate agency under the Ministry of Corporate Affairs, the Serious Fraud Investigation Office (SFIO) to investigate corporate frauds.  It was set up through a Resolution dated  02.07.2003  to  investigate  corporate  frauds  of  serious  and   complex nature.  During the last three years and in the current year from 01.04.2014 to 30.11.2014 the Ministry, has ordered investigations through SFIO in respect of 167 companies for alleged corporate frauds.  Year-wise details are as under:

The Ministry has also conducted inspection under section 209A of books of accounts and other records of National Spot Exchange Limited, Financial Technology India Limited and Multi Commodity Exchange India Limited to examine the alleged frauds committed at the Commodities Stock Exchange.

       Following steps have been taken by the Government in connection with investigation of corporate frauds:

 (i)   Enhanced disclosure norms under the Companies Act, 2013 so that investors get all relevant information from the companies;

 (ii)  “Fraud” has been defined under the Companies Act, 2013 for the first time as a substantive offence, and cover many dubious activities which were not specifically covered under the Companies Act, 1956;

 (iii) Serious Fraud Investigation Office (SFIO) has been granted statutory status with adequate powers under the Companies Act, 2013;

 (iv) Provisions for attachment and disgorgement of assets introduced under the Companies Act, 2013;

 (v)  Auditors’ accountability and independence enhanced through provisions which inter alia include rotation of auditors, etc.  This would improve objectivity of audit and provide better insights to the investors.

       No such Committee has been constituted by the Ministry.  However, for the purpose of speedy disposal of court cases, the respective Registrars of Companies are regularly monitoring the progress of court cases and are also interacting with the respective Chief Metropolitan Magistrates for speedy disposal of the cases.

 This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.