New Delhi: The government's financial fraud investigation agency SFIO will get greater powers to act as a strong deterrent for wrongdoings by corporates, rather than doing firefighting after investors being duped of their money, Corporate Affairs Minister Sachin Pilot said.
At the same time, the SFIO (Serious Fraud Investigation Office) will be entrusted with probes into major cases only that are either of large-scale wrongdoings or are of public interest, Pilot told PTI in an interview here.
"If SFIO goes after all the small allegations, it will lose the novelty and it will not be able to do justice to all the work it is asked to do with its limited manpower," the minister said.
SFIO is a multi-disciplinary organisation under the Corporate Affairs Ministry and is mandated to investigate white-collar crimes and frauds in the country.
The Minister said SFIO needs more people and they do not have sufficient manpower.
"I have already written to some ministries to give some people for SFIO. It needs a pool of people with different backgrounds and with experience in areas like investigation, regulation, taxation, accountancy, forensic auditing, capital markets and information technology," he said.
Pilot said the new Companies Bill will provide statutory powers to SFIO, which would help strengthen its investigation and other capabilities, which should lead to it becoming a stronger deterrent for fraudsters.
"SFIO will have more powers and they should act as a deterrent. But, it will be the surety of the punishment, more than the severity, which needs to be ensured for this," said the 35-year old Pilot, who took charge of Corporate Affairs Ministry about two months ago in October-end, 2012.
The Minister further said the "idea of having a fraud investigation organisation is not just to do firefighting after money has been swindled off and small investors are duped of their hard-earned savings."
"There are many such instances in the recent past we have come to know," Pilot said, while adding that it is also SFIO's job to ensure that investors feel safe and fraudsters are booked sooner than later.
Talking about the companies having defaulted on investors' money collected through private placements and chit funds, the minister said the rich people can still manage to get their money back by hiring lawyers etc, but money of small investors with Rs 10,000-20,000 are generally gone.
"They (such operators) have to be clamped down upon. As chit funds are controlled by state governments, the central government is working on a mechanism to help states to curb such illegal schemes, but the real solution will be detection and mitigation of frauds as they happen," Pilot said.
"Our focus should be on fraud detection before it happens. Today, we have technology and so much data that we can actually kind of not predict but get the pressure points where frauds can take place," he added.
The Corporate Affairs Ministry is already working on setting up a separate corporate intelligence unit to detect possible frauds through use of 'data mining' across the various sources of information available publicly and in the records of Registrars of Companies (RoCs).
It is also seeking help from the Ministry of Information Technology on this front, as a lot of useful data mining and tracking can be done through the cyber world.
"There are many instances in Europe and America where they have used technology and those modellings have been done, where you know about the suspicious transactions to get hints of possible frauds," Pilot said.
The Minister also asserted that the SFIO would not be asked either to target or to help someone.
"Whenever we are asking SFIO to do something, we are doing with the clearest intention that we are trying to get to the bottom of the fraud, find the culprits who have done any wrongdoings and not to target anything and not to help anything," he said.
"Whether somebody is important, unimportant, political, non political, the law is same for everybody. If you have not broken any law, then there is no question of you being targeted.
"If there is some non-compliance by somebody, irrespective of who the person, the law is there black and white to take action. There is absolutely no way you are thinking or assuming that you have taken less or more action.
"The law is same for everybody and it is there in clear black and white. If you have done something not according to the book or not according to the law, then you will invite certain actions, again according to the law," Pilot said.
The Minister further said greater powers for agencies like SFIO should not give a message about the regulations becoming draconian or impediments for investors.
"These entities are there to give strength, stability and confidence to people who want to invest. They cannot or should not be seen as impediments to investments. These agencies must play the role of a comfort-giver and not of some entities that are going to spook the investors," he said.
First Published: Sunday, January 06, 2013, 21:06