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Serious fraud office to handle Ketan Parekh stock, DSQ Soft cases

Richa Mishra

New Delhi , Oct. 14

CLOSE on the heels of getting its first case in Daewoo Motors India, the Serious Fraud Investigation Office (SFIO) has now been handed over two more cases by the Department of Company Affairs (DCA).

The department has referred the cases related to Ketan Parekh Group of companies involved in the stock market scam and the case of DSQ Software.

"All the 16 cases of Ketan Parekh Group have been referred to SFIO," Finance Ministry sources told Business Line. Elaborating further, sources said, "It is not necessary that the SFIO would be restricting its investigations to just these 16 companies. If need be, it can investigate into other group companies under Sections 235, 237 and 239 of the Companies Act."

Section 235 stipulates that the Union Government would appoint one or more competent persons as inspectors to investigate the affairs of a company, while Section 239 empowers the inspector to carry out investigations into the affairs of related companies.

In fact, cracking the whip on companies facing charges of stock market manipulation, the department had initiated prosecution proceedings against more than 14 companies for serious violations of the Companies Act.

DCA had also moved applications to the Company Law Board (CLB) against some of the companies involved in the stock market scam. The charges against these companies include attempts to fraudulently induce persons to invest money and misstatements in the prospectus.

It said that the company management had conducted business with intent to defraud its creditors, members, etc., in a fraudulent and unlawful manner, which is also oppressive of the members of the company.

Some of the companies involved included Panther Fincap & Management Services Ltd, Classic Share Broking Service Ltd, and N.H. Securities.

Earlier, this month the department had referred the case of Daewoo Motors India to the SFIO. The complaint against the company that the SFIO would be investigating would include siphoning and diversion of funds, improper invoicing and manipulating accounts.

The SFIO headed by Mr O.P. Arya, a Joint Secretary rank officer, has been conceived, as a multi-disciplinary unit, capable of investigating corporate white-collar crimes professionally.

The SFIO has been set up to take up investigation of complex frauds having inter-departmental and multi-disciplinary ramifications, besides the public interest in terms of monetary misappropriation or in terms of the number of persons affected.

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Serious fraud office to handle Ketan Parekh stock, DSQ Soft cases

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