GOVT. TO SET UP SERIOUS FRAUD INVESTIGATION OFFICE - PRESS NOTE

The Government has decided to set up a Serious Fraud Investigation Office (SFIO) in the Department of Company Affairs (DCA). It has become imperative in view of the recent developments in the corporate sector in India and outside India. This is also one of the major recommendations made by Naresh Chandra Committee on Corporate Audit and Governance in its report submitted to the Government recently. The SFIO is conceived as a multi-disciplinary unit capable of investigating corporate white collar crime professionally. The SFIO will only take up investigation of frauds characterised by (a) complexity and having inter departmental and multi disciplinary ramifications; (b) substantial involvement of public interest in terms of monetary misappropriation or in terms of number of persons affected; and (c) the possibility of investigations leading to, or contributing towards a clear improvement in systems, laws or procedures. It will investigate “only corporate frauds”.

The DCA will carry out prosecutions for violations under the Companies Act, 1956; the SFIO would forward investigated reports on violations under other Acts to the respective agencies for prosecution and/or other appropriate action. The SFIO will investigate fraud by setting up multi-disciplinary team consisting of experts in the fields such as accountancy, forensic auditing, taxation, law, information technology and capital market etc. Whenever necessary, it may also outsource investigations to professional agencies. It will have initially two regional offices – one each for Northern Region and Western Region.

It has been decided that an empowered committee of Secretaries will screen and approve contractual/deputation appointments at emoluments outside Government scales of pay in order to attract the best manpower resources. The Committee may also give such general directions as may be necessary for the efficient discharge of duties by SFIO. This empowered committee will be headed by the Cabinet Secretary, and have Secretaries, Company Affairs, Revenue, Expenditure and Personnel as its members. 

To supervise, review and monitor the work of SFIO a smaller coordination committee headed by Secretary, DCA, and having as its members Chairman, SEBI, Chairpersons CBDT and CBEC and Directors, CBI, Revenue Intelligence, Enforcement and SFIO, will be formed.