The country will have an early warning system to detect corporate frauds in about a year’s time.
The Serious Fraud Investigation Office (SFIO), under the Ministry of Corporate Affairs (MCA), is developing a framework – Early Warning System (EWS) – that will help detect corporate and financial misdoings in the initial stages.
The proposed framework will have inputs from RoboCop, the computerised tool used by the US market regulator, Securities and Exchange Commission, which automatically triggers alerts concerning suspicious accounting at publicly traded companies.
On Monday, the SFIO and MCA signed memoranda of understanding (MoUs) with the Financial Intelligence Unit (FIU) under the Ministry of Finance and the National Institute of Electronics and Information Technology (NIELIT), which is part of the Ministry of Information and Technology, which will help boost the investigating agency’s capabilities.
The MoUs were signed in the presence of Corporate Affairs Minister Sachin Pilot, who said it would lead to better information sharing between the Ministries and would help deal with rising corporate frauds effectively.
The tie-up with FIU will give SFIO and MCA access to information on suspicious banking transactions under the Prevention of Money Laundering Act, 2002. Besides, NIELIT will set up a cyber forensic lab at the SFIO premises in New Delhi with an outlay of Rs 3.8 crore in two phases.
It will also help train and enhance capabilities of the SFIO officials in cyber forensics.
In reply to a query, Pilot said efforts were being made to bring in the Companies Bill in the Rajya Sabha in the current Budget Session.
Report on Reebok
Corporate Affairs Secretary Naved Masood said SFIO was finalising the report on the alleged financial irregularities at Reebok.
“The SFIO is looking at the case…They are finalising the report,” Masood said here without commenting on when it would be ready.
Reebok India, in its FIR filed last year, had alleged financial misdemeanour of Rs 870 crore by its India officials, including Managing Director Shubinder Singh Prem and Chief Financial Officer Vishnu Bhagat.