The Hindu : Office to probe corporate frauds to be set up

Online edition of India's National Newspaper
Saturday, Jan 11, 2003

National

National

Office to probe corporate frauds to be set up

By Our New Delhi Bureau

NEW DELHI JAN. 10. The Union Cabinet has decided to implement the suggestion of the Naresh Chandra Committee report on corporate governance to set up a Serious Fraud Investigation Office (SFIO) in the Department of Company Affairs (DCA), Ministry of Finance.

As per the decision, the SFIO will be a multi-disciplinary unit capable of investigating corporate white collar crimes but will not undertake prosecution activities.

It will take up investigation of frauds characterised by complexity and having inter-departmental and multi-disciplinary ramification and where there is substantial involvement of public interest in terms of monetary misappropriation or in terms of number of persons affected. It will also take up investigation which could lead to improvement in systems, laws and procedures.

While it has been made clear that the SFIO will investigate only corporate frauds, the prosecutions for violations under the Companies Act, 1956, will be undertaken by the DCA. For violations under other Acts, the SFIO will forward its reports to respective agencies. An empowered committee of Secretaries will give general directions to the SFIO and also screen and approve contractual and deputational appointments at emoluments outside Government scales of pay. The Cabinet also authorised the Union Finance Minister, Jaswant Singh, to hold further consultations with States on the compensation package for them with the implementation of Value Added Tax (VAT) from April 1 next year.

While the Centre had agreed to 50 per cent compensation for the first three years for loss of revenue arising out of the implementation of VAT, the States have demanded 100 per cent compensation in the first year, 75 per cent in the second and 50 per cent in the third.

Since the matter remains unresolved, Mr. Singh will now hold further consultations with the States.

Printer friendly page
Send this article to Friends by E-Mail

National