ROLE OF SERIOUS FRAUD INVESTIGATION AGENCY IN PROMOTING CORPORATE GOVERNANCE: A NEED FOR MORE TEETH

Abstract

Over the last few decades there are number of Corporate fraud are increased around the globe. These corporate frauds are done by the high corporate officials i.e. white color crimes. Firstly, in U.S the wake of Enron Case which led to the enactment of Sarbanes-Oxley Act, Secondly in India the Satyam Scam these are rising regime of corporate fraud which led to suffering of investors, shareholders etc…due to growth of new regime of Fraud there is need of effective Corporate Governance mechanism with attributes of ethics, fairness, transparency as well as economic efficiency to prevent corporate fraud. That’s why India set-up a committee in 2002 to study Corporate Governance under the chairmanship of Naresh Chandra i.e. Naresh Chandra Committee. Several, Recommendations were made by the Committee and one of which is to set-up ‘Corporate Serious Fraud Office’ which has given statutory enactment under the Companies Act 2013 to investigate serious frauds. Which is a Specialized, Multi-disciplinary organization to deal with Serious Corporate Frauds. The whole theme of this idea has been brought from U.K, but in terms of theme only not in terms of functioning. As the Role which assigned to ‘Serious Fraud Investigation Office’ under the newly amended Companies Act is firstly, the action cannot be taken on suo-motu basis as it is entirely depends upon the discretion of Central government. Secondly, Individual applications are barred in directly approaching the SFIO for any fraud allegation to investigate. Thirdly, there is Lack of Allocation of funds as well as Inadequacy of Manpower.