<div>The Parliamentary Standing Committee on Finance has come down heavily on the ministry of Corporate Affairs (MCA) for lagging behind in executing crucial projects required for addressing investor grievances and for failing to formulate recruitment guidelines that could cover the shortfall in specialised posts that remain vacant in the Serious Fraud Investigation Office (SFIO), the investigative arm of MCA.</div><div> </div><div>The Parliamentary committee, incidentally, is headed by former corporate affairs minister M Veerappa Moily under whose tenure most of the reforms within MCA were initiated. The House panel has representations from across political parties. Its members from Lok Sabha include S.S. Ahluwalia and Kirit Somaiya from the BJP, Saugata Roy (TMC), Bhartruhari Mahtab (BJD) and former Prime Minister Manmohan Singh (Congress) from the Rajya Sabha as some of its members.</div><div> </div><div>Taking a serious view of the acute shortage of officers (more than 50 per cent posts vacant) in the Serious Fraud Investigation Office (SFIO), the house panel lamented MCA for its "lackadaisical approach" in realising the full potential of SFIO in unravelling corporate frauds. It said that the three-month deadline to MCA for finalising the recruitment rules for SFIO was missed by the ministry. The Parliamentary panel noted: "The technological capability of SFIO also seems to be falling behind the curve. The Early Warning System, which was propounded as panacea for all corporate frauds at the time of its launch by the ministry, has been dumped by it for want of encouraging results." </div><div> </div><div>The panel expressed its unhappiness with the lack of progress shown by the specialised units within the SFIO. "The computer forensics lab set up in Market Research and Analysis Unit (MRAU) of SFIO is yet to show tangible results by way of timely identification and detection of high-tech corporate frauds."</div><div> </div><div>Responding to the panels suggestion on recruitment for SFIO, the MCA said that the terms of deputation offered in SFIO were not as attractive as offered by other premier Investigation Agencies like CBI, IB, Enforcement Directorate, NIA and SEBI. "As a result, there is no motivation for officers from various organizations to opt for deputation to SFIO. This issue has now been taken up with the 7th Pay Commission and a strong case has been made out for raising the deputation allowance," it said.</div><div> </div><div>Not satisfied with the response, the panel told MCA to finalise the recruitment rules immediately without further delay so that SFIO could have a permanent cadre of officials and lack of manpower would no longer be an issue for its under-performance. The committee noted that MCA in their 'Action Taken Replies' remained silent on the mechanism regarding accountability in case of delays in finalising cases. "The ministry should install a system in this regard and be firm in fixing responsibility where there are delays in finalising cases," the committee told MCA.</div><div> </div><div>The Parliamentary committee also pulled up MCA for delaying the setting up of the Investor Education and Protection Fund (IEPF) Authority as required under the new Companies Act. The Parliamentary panel wants the redressal of all investors grievances under IEPF as a single-window system.</div><div> </div><div>In its report on demand for grants 2014-15 for MCA, the House panel said that creation of IEPF Authority has taken an "unduly long time". Panel noted that excluding investor grievances from the mandate of IEPF Authority will do “no justice” to the investors' fraternity.</div><div> </div><div>The proposed IEPF Authority would be responsible for administration of investor education and protection funds, undertaking investor awareness, refund of unclaimed amounts, distribution of disgorged money and reimbursement of legal expenses under class action suits.</div><div> </div><div>"The Ministry should include all investor-related activities including redressal of investor grievances under the ambit of the Authority as it will act as a single window for all investor problems," the report said. The report was submitted to Parliament on Saturday.</div><div> </div><div>The house panel urged MCA that the Indian Institute of Corporate Affairs (IICA) should redefine itself rather than just being a training institution. "Considering the amount of investments which has gone into creating such massive infrastructure of the Institute, much more needs to be done," it noted. IICA should not limit its scope by merely becoming a training institution for the probationers of the Indian Corporate Law Service and other officials of MCA, it said rather It should rather redefine its role and pro-actively position itself in the market as a leading research-based institute, which can serve the growing needs of Indian industry in the area of corporate law and practice," it added.</div><div> </div><div> </div><div><em>ashish.sinha@businessworld.in</em></div><div> </div>
BW Reporters
Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
