Probing 167 companies for fraud; West Bengal tops list: Govt

Government has ordered probes against 167 companies for alleged corporate frauds in about four years of which West Bengal accounts for 82, the largest number, Parliament was informed today.
Out of the total probes ordered in this period by the Corporate Affairs Ministry, the government has received investigation reports in cases relating to 81 companies.
West Bengal is followed by Delhi with the second largest number of 66 companies in terms of probes ordered.
Number of investigations for Uttar Pradesh is six, Tamil Nadu (5) and Maharashtra (4), while Andhra Pradesh, Gujarat and Assam have one such companies each. One case relates to a foreign company as well.

"During the last three years and in the current year from April 1, 2014 to November 30, 2014 the Ministry, has ordered investigations (through SFIO) in respect of 167 companies for alleged corporate frauds," Minister of Corporate Affair Arun Jaitley informed the Lok Sabha in a written reply.
"Investigation reports in respect of 81 companies have been received in the Ministry," he added.

Further, Jaitley said that the ministry is in the process of developing an 'Early Warning System (EWS)' aimed at generating alerts for detecting cases of potential fraud and malfeasance.
"A pilot test was carried out during 2013-14. The results are being analysed and the system requires to be further fine-tuned," Jaitley said.

"In the meanwhile, SFIO has been tasked with examination of complaints of investors logged on the MCA 21 portal, for which a dump of complaints received will be shared with SFIO online," he added.
According to the Minister, this will help in identifying "red flags" or early warnings of potential frauds by companies that can be later taken up for investigation.
He also said that the government has taken various other measures to curb frauds, such as making 'fraud' a substantive offence under the new Companies Act, stricter corporate governance norms and mandatory requirement for company directors to obtain "Directors Identification Number (DIN)".

To a separate query on compliance reports related to labour laws, Jaitley said: "There is no requirement under the Companies Act, 1956/2013 of filing any report by companies with the Registrars of Companies or other offices under the Ministry of Corporate Affairs regarding compliance with labour laws".