New Bill to recognise SFIO role

Written by Neha Pal | New Delhi | Updated: Jun 26 2009, 05:36am hrs
Six years after the serious fraud investigation office (SFIO) was set up, the ministry of corporate affairs (MCA) has finally decided to recognise the role and powers of SFIO in the revised Companies Bill, thereby providing it with the much-required legislative teeth. Currently, SFIO doesnt find any mention in the Companies Act, 1956. The MCA has also decided to strengthen the SFIOs office and has sanctioned 50-60 new posts.

An MCA official told FE, The ministry of corporate affairs is going to recognise the role of the serious fraud investigation office and give it more teeth in the revised Companies Bill. We will make SFIO an important arm of MCA in the revised bill and give it more powers. We will soon start with the procedure of recruiting more people in the SFIOs office as 50-60 new posts have been sanctioned. At present, if the government wants SFIO to undertake some investigation, then they have to appoint some inspectors in the office. Moreover, SFIO does not have the power to seek documents and evidence which is one of the main hindrance in its investigation.

The task of strengthening SFIO and giving it a place in the revised Companies Bill gained momentum after the new corporate affairs minister stated the need of giving special powers and investigation rights to SFIO that can be exercised only by the police and CBI. Even the eight-member committee, headed by Vepa Kamesam, former deputy governor of RBI submitted its report recently to the ministry that suggested a separate statute for the SFIO.

With the number and magnitude of corporate frauds increasing, the Vepa Kamesan Committee has also suggested the ministry to give SFIO the power to collect evidence from abroad through Letters Rogatory. A Letters Rogatory is a formal request from a court to a foreign court for judicial assistance.