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DCA identifies cases for serious fraud office

Our Bureau

New Delhi , Sept. 24

THE Department of Company Affairs has identified the first batch of cases to be referred to the Serious Fraud Investigation Office (SFIO), an agency set up for investigating serious corporate frauds.

Said the Secretary, DCA, Mr M.M.K. Sardana: "It will only be the fresh cases which will be referred to the SFIO and not those on which investigations are already going on."

Hinting at some of the cases, which may be referred to the SFIO, informed sources told Business Line, these may include those related to the stock market scam of 2001. These cases include investigations against certain companies owned by Ketan Parekh and DSQ Software.

On whether the Government will continue outsourcing independent investigators, Mr Sardana, while addressing media persons here today, said "the Government would consider outsourcing investigations of more companies after it evaluates the first two such probes of Xerox Modicorp and Flex Industries, where the department has outsourced investigators."

The DCA would like to outsource more and more investigations if the quality of those in the Xerox and Flex cases were found satisfactory, Mr Sardana said. On the current status of these investigations, he said in the case of Xerox one foreign director is yet to be examined, while in the case of Flex Industries the investigator has been conferred with more powers to investigate four other companies.

Speaking on the expenses involved in the entire process of outsourcing investigations, the Secretary said, it is not expensive. "We are spending about a couple of lakhs. In fact, the investigators are also not after money but want to do a good job," he said.

On allegations made by the Janata Party leader, Mr Subramaniam Swamy, against Reliance, the Secretary said the present complaints were voluminous and the department was yet to determine the nature of these charges. When questioned on the status of probe in the stock market scam cases, he said as many as 539 prosecutions have been launched, adding that in some cases, there was more than one case against a company.

On India Depository Receipts (IDR) guidelines, Mr Sardana said the department has sent these guidelines to the Law Ministry for vetting and that these should also be notified soon. Whether it would be DCA or the Securities Exchange Board of India (SEBI) which would be regulating the IDR norms, Mr Sardana said, "Both have a role to play."

Asked about norms for private placement of debt by listed companies, a SEBI official said these guidelines had been firmed up and would be notified soon.

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