Sunday, July 24, 2011

Serious Fraud Investigation Office (SFIO) Of India Would Get More Powers

Serious fraud investigation office (SFIO) is a corporate fraud investigating body under the ministry of corporate affairs (MCA), India. SFIO has been seeking broader powers to carry out investigations abroad. Now the MCA is considering this proposal of SFIO that would allow it to trail funds abroad.

Lack of such powers has also been hampering SFIO’s investigations into the multi-crore Satyam fraud as the company has operations in other countries also. Set up in 2003, the government plans to give the SFIO more teeth in the new Companies Bill, which was tabled in Parliament last August.

A permanent cadre for the SFIO is also under consideration to ensure more stability to the body. Diversion of funds is a Companies Act violation, but when funds are hived off abroad it becomes a hawala transaction, and falls under the ambit of the Enforcement Directorate.

The proposals to give SFIO more teeth for investigation are mostly based on the recommendations of the V Vepa Kamesam Committee. Giving the SFIO powers to trail illegal money stashed away abroad is, however, not part of the committee's suggestions.

The eight-member committee had suggested that the SFIO be given exclusive jurisdiction to probe and prosecute entities involved in financial frauds, besides also probing cases related erring entities/individuals like chartered accountants and company secretaries.

The committee is of the opinion that power of search and seizure, and attachment should be entrusted with the SFIO as available with the Income Tax authorities, Customs, Enforcement Directorate etc.

It has also suggested that the SFIO be empowered to take up a case suo moto and even on a source-based information if a fraud has been committed. The committee has also called for the SFIO having flexibility to outsource the services of experts like chartered accountants, legal experts etc and officers joining the investigating agency on deputation be ensured protection of their existing pay and allowances.