Anti-fraud drive: New govt may bolster SFIO’s probe muscle

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Updated: May 30, 2019 5:49:50 AM

With increasing instances of corporate frauds, the new government could consider substantially raising the strength of the Serious Fraud Investigation Office (SFIO) to bolster its capacity to investigate

sfio, ibc, jet airwaysThe strengthening of the SFIO is part of the broader efforts by the corporate affairs ministry to ensure corporate fraudsters are appropriately punished, while boosting the insolvency eco-system.

With increasing instances of corporate frauds, the new government could consider substantially raising the strength of the Serious Fraud Investigation Office (SFIO) to bolster its capacity to investigate, sources told FE.
In the past two years, the anti-fraud watchdog has investigated several high-profile cases, including Bhushan Steel, Nirav Modi and IL&FS, and may soon start probing potential financial wrongdoings at grounded Jet Airways. Last week, Jet Airways founder Naresh Goyal and his wife Anita were stopped at the Mumbai airport from going abroad, as a look-out notice was issued against them.

Based on its own findings, the SFIO had in August last year arrested Bhushan Steel’s erstwhile promoter Neeraj Singal for allegedly siphoning off funds worth over Rs 2,000 crore. Its investigations had detected gross irregularities at IL&FS and led to the arrest of its former chairman Hari Sankaran in April.

Currently, SFIO is led by its director Amardeep Singh Bhatia, and comprises seven additional directors, one joint director, four deputy directors, 12 senior assistant directors, 19 assistant directors, five prosecutors and other support staff, according to the information available on its website.

“With the Insolvency and Bankrutpcy Code (IBC) stabilising, more and more default cases are coming up for resolution. While in many cases, the default might have been caused by genuine business reasons, in some cases where the default was caused by fraud by promoters, etc, the SFIO’s investigation is required. So the agency needs to be strengthened urgently, as there is a huge manpower crunch,” said one of he sources.

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“Although defaulting promoters are forced out of their stressed companies under the IBC, it doesn’t absolve them of any financial embezzlement they might have committed while causing the default,” said another source.

The strengthening of the SFIO is part of the broader efforts by the corporate affairs ministry to ensure corporate fraudsters are appropriately punished, while boosting the insolvency eco-system.

The anti-fraud watchdog was set up in 2003 to be a multi-disciplinary organisation, consisting of experts in accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white collar crimes and frauds. Its headquarters is in New Delhi and it has five regional offices — in Mumbai, New Delhi, Chennai, Hyderabad and Kolkata.

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