Companies Bill will facilitate speedy trial of corporate fraud cases.
Union minister for corporate affairs M Veerappa Moily on Friday said the Companies Bill will be enacted into a law in the monsoon session. The report has been submitted to the Speaker and it will be moved to the Cabinet.
At an ASSOCHAM national conference on ‘State of Corporate Fraud Control in India’ here, the minister said the bill will facilitate corporate fraud cases be tried and concluded within six months of its occurrence.
He said he would like to have a special force, specifically trained to deal with such cases. “It should be tried by a special judiciary and prosecution, not just any magistrate,” the minister said.
Expressing concern over an increase in corporate fraud cases in the country, Moily said corporate governance was the need of the hour. India Inc needs to work hand in hand with the government to put an effective regulatory framework in place, he added.
“With rapid expansion of sophisticated computer and communication technology, economic entities are finding innovative means to conceal transactions,” he observed.
“The corporate world needs set its own house in order by adopting sound risk management mechanism,” Moily said.
Highest levels of business integrity could be achieved through sound corporate governance, internal control and transparency, he added. “We want to be able to showcase India as a good example of corporate governance to the rest of the world,” he said.
Various industry bodies too have reacted positively towards the proposed bill. L Krishnan, chairman, CII Karnataka State Council said it showed a convergence between the industry and the intent of the government. “The new law is a welcome move. The existing laws are outdated and not in tune with the current governance issues,” he said, “With this law, the average quality of governance will definitely improve, and the shorter time frame to try fraud cases within six months will also act as a deterrent for miscreants,” Krishnan added.
According to a report by Ernst & Young titled “Fraud and corporate governance, changing paradigm in India”, bribery and corruption, fraud by senior management and vendor fraud or kickbacks are among the most common occurrences in the corporate world here. In fact, in 89% of fraud cases, CEO and CFOs were named for involvement.
As a result, the reputation of organisations has taken a beating.
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