The Hindu Business Line : Ministry to approach CLB against Daewoo Motors

MISERIES are far from over for Daewoo Motors India Ltd (DMIL) with the Ministry of Company Affairs proposing to approach the Company Law Board (CLB) against the company.

According to sources, the application would be moved on behalf of Serious Fraud Investigation Office (SFIO) against DMIL for disgorgement of assets.

The Ministry's move comes in the wake of its decision to take such investigations to its logical end. The SFIO has sought the Ministry's permission to initiate prosecution against the company. The SFIO has approached the Ministry for appointing one of its officers as a company prosecutor to take up company cases, sources said.

A high-power team of the Ministry, which was set up to examine the investigation report of the SFIO on the company, has suggested initiating prosecution against DMIL after following due process of law.

The committee in its report has suggested prosecutions for non-maintenance of records and disposal of assets without shareholders' approvals. The committee, besides suggesting further investigations into other issues, has also suggested prosecutions against the company and its promoters.

Further, it has recommended that the company and its officers in default should be punished under the Indian Penal Code for falsification of accounts and records for withdrawal of working capital. It has also endorsed prosecutions for fraud in providing under benefit to the parent company, Daewoo Corporation of Korea, to the extent of $36.8 million in respect of effect of exchange rate fluctuations resulting in cheating with Indian financial institutions.

Further, the committee has also pointed out violation of conditions imposed by the Union Government on inter-corporate deposits.

According to Ministry sources, the committee has suggested further probe on issues such as over-invoicing of capital goods imports, investment in shares and securities and the role of auditors.

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