Big financial fraud cases nearly doubled in a year

The number of financial fraud cases has nearly doubled in 2017-18 as compared to the previous year.

Published: 29th April 2018 04:34 AM  |   Last Updated: 06th May 2018 09:57 AM   |  A+A-

PNB fraud case

Police escort a man suspected of steering fraudulent loans to companies linked to billionaire jeweller Nirav Modi, at a court in Mumbai, India, February 17, 2018. REUTERS/Danish Siddiqui

Express News Service

NEW DELHI: The number of financial fraud cases has nearly doubled in 2017-18 as compared to the previous year.

The Serious Fraud Investigating Office (SFIO), the government’s arm that handles complex financial fraud cases such as the Nirav Modi-PNB case, has got overloaded with cases of white collar crime.

According to data compiled by the Ministry of Corporate Affairs, under which the SFIO comes, 209 cases of big financial fraud were referred to the SFIO in 2017-18 (till March 1, 2018). This is almost double the figure in 2016-17, when 111 cases were given to the agency. The maximum number of cases is from Maharashtra.

Senior officials attributed the massive jump to the government’s crackdown on black money, benami properties and shell companies. It has resulted in the unearthing of a huge number of cases relating to financial or corporate fraud. Cases of alleged suspicious transaction involving huge amounts of money in the wake of demonetisation have also been referred to the SFIO.

READ | Hundreds of financial fraud cases, only four convictions

The fraud related to Nirav Modi and PNB is just one of the big cases assigned to the probe agency in the last one year.

The SFIO is also investigating the Kingfisher Airlines case and sources said it had come across various violations of company law in the case.Recently, investigation related to the Maharashtra-based realty firm, DS Kulkarni group, which allegedly defaulted on payments to depositors, has also been given to the SFIO. The agency is also looking into alleged financial irregularity by Bhushan Steel.

Even Asaram Bapu, who was recently convicted and sentenced for raping a minor, first ran into trouble in 2013 after the SFIO sought his prosecution in a `700 crore land grab case in Madhya Pradesh. 

The increased workload is stretching the SFIO, already grappling with a staff crunch and working with just about half its sanctioned strength. The SFIO has a sanctioned strength of 133 but only around 66 posts had been filled till March. 

Considering the increased workload, the probe agency has planned to hire many people at senior levels, including assistant directors. In a public notice recently, the white collar crime probe agency has sought applications for filling up seven posts of Assistant Director (Investigation), two of Assistant Director (Law), five of Senior Assistant Director (Banking) and five of senior prosecutor.

 They will be positioned at various places such as Delhi, Mumbai, Chennai, Kolkata and Hyderabad. Officials said new recruitment rules for SFIO were being notified, paving the way for the creation of a permanent cadre over a period of time.

Apart from this, about 35 experts from various fields have been engaged as consultants in the department.

Lack of officials at the agency has also resulted in under-utilisation of funds. `18.33 crore were allocated to the probe agency during the year 2017-18, out of which only `13.83 crore could be spent (till March 1, 2018).Recently, the parliamentary standing committee on finance, in its report, had also talked about the staff crunch, saying that the SFIO should fill its vacancies with adequate permanent cadre and strengthen its investigative and prosecution arms by developing a foolproof fraud detection mechanism.

The SFIO is a multi-disciplinary investigating agency wherein experts from diverse fields like banking, capital markets, corporate law, forensic audit, taxation, and information technology work together to unravel corporate frauds. It is headed by a director in the rank of Joint Secretary to the Government of India. He is assisted by additional directors, joint directors, deputy directors, senior assistant directors, assistant directors, prosecutors and other secretarial staff.

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