From the years 2009-10 to 2013-14 (till date), 132 cases of fraud/ illegal transaction have been brought to the notice of the Ministry of Corporate Affairs. Giving this information in written reply to a question in the Rajya Sabha today Shri Sachin Pilot, Minister of Corporate Affairs, gave details of the action taken in respect of these cases as follows:

(i) In 89 cases, investigation under Section 235 of the Companies Act, 1956 into the affairs of the companies has been ordered through the Serious Fraud Investigation Office (SFIO). Year-wise details are as follows:

 (ii) In 21 cases, inspection of the books of accounts and other records has been ordered under section 209A of the Companies Act, 1956;

(iii) In 08 cases, the concerned Registrars of Companies (RoCs)have been asked to scrutinise the Balance Sheets and other documents;

(iv) Complaints of fraud against 12 companies, which launched ‘Collective Investment Schemes (CIS)’ or collected money by promising high returns but became dormant and did not refund the money, have been referred to Securities and Exchange Board of India (SEBI) which is the regulator of such schemes and Economic Offences Wing of the respective State Governments; and

(v) In 2 cases, companies are under liquidation.

Measures taken by the Ministry of Corporate Affairs for early detection of potential corporate frauds, include:

(i) Developing a “Fraud Prediction Model” (FPM) that would generate alerts for analysis and early detection of potential frauds. A Steering Committee consisting of domain experts has been set up by the Ministry to suggest a comprehensive framework for developing such a model.

(ii) Strengthening the Market Research & Analysis Unit (MRAU) of Serious Fraud Investigation Office (SFIO) through induction of new technology and skilled manpower.

KKP

(Release ID :95659)

Corporate fraud detection: ministry advances a fraud prediction model and orders investigations, inspections and regulatory referrals. Operational enforcement measures include ordering investigations under company law, directing statutory inspections of books and records, instructing registrar scrutiny of balance sheets, referring suspected collective investment schemes to securities and state economic offences units, and supervising liquidation. Preventive initiatives include development of a Fraud Prediction Model to generate analytical alerts and strengthening the Market Research and Analysis Unit through technology and skilled personnel.