The Government has said that no verified information is available which indicates that the cases of corporate frauds are constantly increasing in the corporate sector in the country. However, an elaborate regulatory framework is already in place under the Companies Act, 1956 as well as the regulations of other agencies like Securities and Exchange Board of India, Enforcement Directorate, Central Bureau of Investigation, etc. to deal with corporate frauds.
Giving this information in written reply to a question in the Lok Sabha today, the Minister for Corporate Affairs, Shri Salman Khurshid said that the Government is empowered to inspect the books of accounts of the companies and also to investigate their affairs under the Companies Act, 1956.
He informed the House that the Ministry of Corporate Affairs has implemented MCA-21 e-Governance project which has increased the transparency as the data available in the public domain can be viewed by any person.
It is not a very respectable state of affairs in which the govt. is compelled to declare that “no verified information is available which indicates that the cases of corporate frauds are constantly increasing in the corporate sector in the country”. There is hardly a single police station in the urban areas in India where thousands of FIRs are lodged against corporate frauds and very few courts where such cases are not pending. In fact the number in both cases must be mind-boggling, and in the latter case since most of the accused are absconding!
It is, therefore, submitted that the Hon’ble Minister would appear to have been misled by officials not competent to gather information from the field, for this also is in the realm of inquiries.
In fact, even Income Tax deptt. also would be able to assist the MoC as regards the company frauds FROM THEIR DATA ON UNRECOVERED AND NON-RECOVERABLE TAXES FROM COMPANIS ON WHOM NOTICES CANNOT BE SERVED. iN FACT, MOST OF THESE CASES MAY EVEN BE PENDING AT VATIOUS APPELLATE LEVELS OR EVEN BEFORE WRITE OFF COMMITTEES.
It is sad. This shows that actually there is no control. We may recall the the whole decade of 1990-1999 was a decade of millions of citizens defrauded by multitude of companies floated in hundreds every day. These people became paupers overnight. Hundreds committed suicides. The few promoters of the hundreds of companies who were finally arrested spent some years in jail then came out and cases will take years to be decided. Most of the cheats fled India, they keep visiting their home regularly but with false or bogus passports. This is known to authorities. This was known to them when the promoters started operations, gave shares to the authorities, had share prices increased sky high so that these bureaucrats made lakhs by selling the shares as advised by promoters. So when markets crashed, they were safe, promoters absconded, common people got crushed.
Today also, the position is no better. Share holders find too much problem and they have no security against very big monolithic titans and giants of cos. And these cos. do not care for the government for well known causes.
This is all in the knowledge od ministry. But they are also helpless.