Financial Daily from THE HINDU group of publications
Thursday, Nov 06, 2003
Financial Daily from THE HINDU group of publications Thursday, Nov 06, 2003 |
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Corporate
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Economic Offences SFIO probe on Daewoo Motors in full swing Richa Mishra
New Delhi , Nov. 5 THE worst is far from over for Daewoo Motors India Ltd, the erstwhile makers of the world's `best small car' Matiz. The Serious Fraud Investigation Office (SFIO), which is investigating the case of Daewoo, has fixed a tight time schedule to complete its work. Last month, the Department of Company Affairs (DCA) had referred the case to SFIO, an agency set up for investigating serious corporate frauds, on complaints received from an investor and lenders to Daewoo India. Informed sources told Business Line, "In an ideal situation the investigations should be completed in three months' time. But in cases like this where multiple investigations are required, it is difficult to say by when the work will be over." Meanwhile, the SFIO team has been visiting the Daewoo site regularly. Probes also include investigations into affairs of the company and the role of the management. The complaints against the company that the SFIO would be investigating include siphoning and diversion of funds, improper invoicing and manipulating accounts. The carmaker has been mired in litigation ever since its parent's takeover by General Motors, which however, did not include the Indian operations. The case was referred to the SFIO recently due to complaints of financial mismanagement to the tune of around Rs 1,000 crore. The company, which once rolled out popular models such as the Cielo and the Matiz, has a debt liability in excess of Rs 3,000 crore. Of this amount, Rs 2,000 crore is an unsecured subordinate debt from Daewoo Corporation. The Indian debt exposure is limited to around Rs 1,240 crore including Rs 400 crore each to ICICI Bank and IDBI and the balance to Exim Bank, sources said. The company is stated to have understated its losses in the past. Further, the assets of the company are currently with the court receiver. The DCA has been examining the issue under Section 235 of the Companies Act, 1956. The section empowers the Union Government in cases where a complaint has been made to appoint one or more competent persons as inspectors to investigate the affairs of the company. The SFIO headed by Mr O.P. Arya, a Joint Secretary rank officer, has been conceived as a multi-disciplinary unit to investigate corporate white-collar crimes.
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