Centre plans to vest fraud office with more powers

“These days with the Finance Ministry getting into the question of double taxation avoidance agreement (DTAA) and all .. data has to be traced. Even when a fraud is there, they also may stash away a lot of money from this country and yes, I agree with you,” Veerappa Moily told PTI when asked if the ministry will consider SFIO the power to trail funds abroad.

A corporate fraud investigating body under the ministry (MCA) the SFIO has for long been seeking powers to carry out investigations abroad.

Lack of such powers has also been hampering SFIO’s investigations into the multi-crore Satyam fraud as the company has operations in other countries also. Set up in 2003, the government plans to give the SFIO more teeth in the new Companies Bill, which was tabled in Parliament last August.

Moily further said a permanent cadre for the SFIO is also under consideration to ensure more stability to the body. “The concept of a multi-faceted agency should also be taken to consideration at the same time there should be a permanent cadre of regulators...at the same time you can totally avoid taking people on deputation ... so that there is continuity and at the same time there is flexibility,” he said. Diversion of funds is a
Companies Act violation, but when funds are hived off abroad it becomes a hawala transaction, and falls under the ambit of the Enforcement Directorate.

“If there is any such deficiency, I would like to look into it and try to see and tighten the system to see that no culprit gets out of our hands. We need to apply our mind and whatever power-- legal or otherwise needs to be given to this office, will be given,” Moily added. The proposals to give the Serious Frauds Investigation Office more teeth for investigation are mostly based on the recommendations of the V Vepa Kamesam Committee. Giving the SFIO powers to trail illegal money stashed away abroad is, however, not part of the committee's suggestions.

The eight-member committee had suggested that the SFIO be given exclusive jurisdiction to probe and prosecute entities involved in financial frauds, besides also probing cases related erring entities/individuals like chartered accountants and company secretaries.
The committee is of the opinion that power of search and seizure, and attachment should be entrusted with the SFIO as available with the Income Tax authorities, Customs, Enforcement Directorate etc.

It has also suggested that the SFIO be empowered to take up a case suo moto and even on a source-based information if a fraud has been committed. The committee has also called for the SFIO having flexibility to outsource the services of experts like chartered accountants, legal experts etc and officers joining the investigating agency on deputation be ensured protection of their existing pay and allowances.