Serious Fraud Investigation Officer (SIFO) Gets More Power under Company Bill 2012

The government's financial fraud investigation agency Serious Fraud Investigation Officer (SFIO) will get greater powers to act as a strong deterrent for wrongdoings by corporate.

SFIO is a multi-disciplinary organization under the Corporate Affairs Ministry and is mandated to investigate white-collar crimes and frauds in the country. 

Corporate fraud investigation body SFIO will have the power to carry out arrests once the new Companies Bill is passed by Parliament.

"SFIO shall have the power to arrest in respect of certain offences of the Bill which attract the punishment for fraud. Those offences shall be cognisable and the persons accused of any such offence shall be released on bail subject to certain conditions provided in the relevant clause in the Bill.

The decision to give legal and statutory powers to the SFIO by including appropriate provisions in the new Companies Bill -- which is awaiting Parliament's nod -- is in line with the recommendations of the Vepa Kamesan Committee on strengthening the SFIO. The SFIO is under the administrative control of the Corporate Affairs Ministry.

The eight-member committee had suggested that the SFIO should be given exclusive jurisdiction to probe and prosecute entities involved in financial frauds, as well as probe cases related to erring entities/individuals like chartered accountants and company secretaries.

The committee is of the opinion that the power of search and seizure and attachment should be entrusted to the SFIO, as available with the Income Tax authorities, Customs Department, Enforcement Directorate, etc.

It is also recommended that SFIO should be empowered to take up cases suo moto and even on source-based information if a fraud has been committed.

The committee has also recommended that the SFIO should have the flexibility to outsource the services of experts like chartered accountants, legal experts, etc

Companies Bill will provide statutory powers to SFIO, which would help strengthen its investigation and other capabilities, which should lead to it becoming a stronger deterrent for fraudsters. 

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

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