The Hindu Business Line : Inter-ministerial group to examine prosecutions against Daewoo

THE Government has set up an inter-ministerial group (IMG) to examine the proposals for initiating prosecution against Daewoo Motors India Ltd (DMIL). The IMG comprises nominees of the Ministry of Company Affairs, Central Board of Direct Taxes, the Law Ministry and the Central Bureau of Investigation.

The IMG has been asked to examine the recommendations of a high-powered team of the Ministry of Company Affairs, which after reviewing the investigation report of the Serious Fraud Investigation Office (SFIO), had endorsed initiating prosecution against the company, official sources said. "They have been asked to examine the report in the light of various other investigations, which have been undertaken by their respective Departments against the company," the sources said.

Regarding whether any time frame has been given to the IMG, they said, "It has been asked to submit the report in three months." Based on the recommendations of IMG, future action will be taken against the company, Ministry sources said.

The high-powered team of the Ministry had suggested prosecutions against the company and its promoters, besides suggesting further investigations into other issues. Prosecutions were recommended against the company and its officer in default under the Indian Penal Code for falsification of accounts and records for the withdrawal of working capital.

The team had also endorsed prosecutions for fraud in its dealings with the parent company, Daewoo Corporation of Korea, to the extent of $ 36.8 million in respect of exchange rate fluctuations resulting in cheating with Indian financial institutions.

The team has also pointed out the violation of conditions imposed by the Union Government on inter-corporate deposits. Prosecutions have also been recommended for non-maintenance of records and disposal of assets without shareholders' approval. A further probe on issues such as over-invoicing of capital goods imports, investment in shares and securities and the role of auditors has been recommended.

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