"We have done quite a lot of work on developing a system on how to detect a fraud before they become a full-blown scam. We have prepared a very solid and comprehensive game plan in this regard," Corporate Affairs Minister Sachin Pilot said. (Agencies)
The measures needed for implementing this new system would start rolling in few weeks, the Minister added.
Asked about the details of this game plan, Pilot said that a host of agencies -- Financial Intelligence Unit (FIU), Serious Fraud Investigation Office (SFIO), agencies under the Finance and Home Ministries, Sebi, RBI, other departments -- are currently undertaking investigation and oversight functions with regard to corporate frauds.
"We should not work in isolation. What we need to do is to ensure that nobody misuses loopholes and regulatory gaps between various agencies," Pilot said in an interview.
"If you look back at last few years, most of the scams have become known only after all the damage has been done, money has been siphoned away, assets are dissolved, there is almost nothing left except for catching the perpetrators and putting them in jail,” he said.
"That may give some satisfaction but does not actually help the investors whose money has been looted. What we thought that we must coordinate with the various departments at Centre and in states to create data mining capabilities and use the latest technology to detect the fraud at the earliest," the Minister said.
The SFIO, which functions under the Corporate Affairs Ministry, is already working on a fraud detection model, which would work as an early warning system to detect corporate wrongdoings in initial stages and the same is expected to be functional by the end of this month.
The SFIO felt the need to develop an early warning system after the high-profile Satyam scam came to light in early 2009. Since then, SFIO has been mandated with a number of other high-profile probes including the Reebok and Saradha scams.
The SFIO report on its probe into 54 companies, including Saradha group entities, suspected to have defrauded lakhs of investors in West Bengal, is expected in next few days, Pilot said.
Talking about the comprehensive fraud detection gameplan, Pilot said that information about almost all corporate and business transactions is currently available online with various entities including banks, regulatory bodies, registrars of companies and other government departments.
"A lot of data is available. What we are doing is to develop a system where red flags go up whenever something goes wrong, at the very initial stage," he said.
"We have done quite a lot of work on developing a system on how to detect a fraud before they become a full-blown scam. We have prepared a very solid and comprehensive game plan in this regard," Corporate Affairs Minister Sachin Pilot said.