Since inception, 6 probes by SFIO led to convictionshttps://indianexpress.com/article/business/business-others/since-inception-6-probes-by-sfio-led-to-convictions/

Since inception, 6 probes by SFIO led to convictions

Agency took 542 days, on an average, to complete investigations for each of the 162 cases probed by it.

corporate fraud, Serious Fraud Investigation Office, SFIO, Fraud Investigation Officerecord, stock market, insider trading, stock market inside trading, inside trading scams, indian express, express news, business news
Despite the rising cases of financial scams, the number of cases referred to the SFIO for investigation has actually seen a dip last year — from 83 in 2013-14 to 52 in 2014-15.

For what is billed as the country’s frontline defence against corporate fraud, the Serious Fraud Investigation Office or SFIO’s track record is far from inspiring.

In the twelve years since it was set up, the SFIO has managed to produce a total of six investigation reports that have successfully resulted in convictions, including the Satyam fraud and the Reebok case. On an average, the agency has taken 542 days — or about a year-and-a-half — to wrap up each of the 162 cases where investigations have been completed by it, according to information updated till March 2015 that was provided by the Ministry of Corporate Affairs to a parliamentary panel. And despite the increasing cases of stock market and insider trading scams, failure of non financial banking companies and instances of vanishing companies, the number of cases referred to the SFIO for investigation has actually seen a dip last year — from 83 in 2013-14 to 52 in 2014-15.

Modelled on the UK’s Serious Fraud Office and the US’ Corporate Fraud Task Force, the SFIO, however, pales in comparison to its international peers on operational parameters. In case of the UK’s SFO, for instance, of the 12 new investigations that the British agency opened during the reporting year 2013-14, it concluded, or had in progress, a total of 8 cases and charged 35 defendents. In just three cases were investigations concluded without charges. According to the progress report submitted by David Green, director, UK Serious Fraud Office, on June 23, 2014, the agency’s conviction rate, going by the number of defendants, was 85 per cent, a creditably high statistic.

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In its defence of the SFIO, the Ministry of Corporate Affairs has stated that an estimated 1,028 cases were still pending in various fora at different stages of prosecution and that the delays in the overall legal system were partly to blame for the low success in conviction rates in cases. The biggest problem faced by SFIO, by the ministry’s own admission, is that of manpower. For an agency that was conceived as a cutting-edge multi-disciplinary investigative body wherein experts from diverse sectors like banking, capital markets regulation, corporate regulation, law, forensic audit, taxation, information technology working together to unravel corporate frauds, as many as 75 vacancies out of a sanctioned strength of 130 personnel were lying vacant till March this year, primarily on account of the failure of the Ministry of Corporate Affairs in finalising the Recruitment Rules for the SFIO, which was accorded a statutory status under the Companies Act, 2013. The Ministry , in a submission to the panel in end-March, submitted that “it is not feasible to confirm the date of finalisation of Recruitment Rules at this stage.”

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On the issue of functional for the SFIO, the status of the director is that of a joint secretary level post, a position that needs to be upgraded to make the overall authority of the agency an overarching one. Getting expertise also needs a reworking of the salaries. As against this, UK SFO director Green’s basic annual salary of British pound 175,000 during 2013-14, the salary of the SFIO’s director, just for the sake of comparison, works out to about Rs 9,00,000 per annum, or under British Pound 10,000 per annum. Green’s overall salary for 2013-14, including benefits, was about British Pound 205,000.

Even as the shortage of regular staff is denting progress of investigations, to enable faster appointment of consultants and experts at the SFIO, it has now been proposed to create an approved panel of Chartered Accountants, similar to the practice followed in other departments such as income tax and the CBI. As an interim measure to tide over the shortage of skilled professionals, a scheme for engagement of consultants in different fields is under consideration with the department of expenditure, an official said.

Slow progress

* Despite the rising cases of financial scams, the number of cases referred to the SFIO for investigation has actually seen a dip last year — from 83 in 2013-14 to 52 in 2014-15.

* In its defence, the Ministry of Corporate Affairs has stated that an estimated 1,028 cases were still pending in various fora at different stages of prosecution.