Faced with a growing number of financial frauds, theCorporate Affairs Ministry is setting up a new intelligence unit that will delve into 'data mining' from all possible sources to detect any wrongdoings by the companies and their promoters at the earliest possible stage.

"In the Ministry, we are setting up an intelligence unit. It is at a nascent stage. We would be putting technical people with lot of experience and expertise on the job and these would be the people who can mine the data," Corporate Affairs Minister Sachin Pilot said.

"The idea is to have a set of people to do the data mining, collection and checking of records that is available on various platforms, and then link them with the inputs from investigating agencies," Pilot said.

The Minister said that the information needed to detect possible corporate frauds at an early stage is generally available on one or the other platform, and what is actually needed is that "we have to have the sense to mine it".

"For any financial fraud, you need to have companies registered, institutions, bank accounts, statements, filing and reporting... Investigating agencies have to find the links and they need to talk to each other.

"Unless agencies talk to each other, you cannot have a smart, pro-active machinery to stop things before they go wrong," Pilot said, adding that the new unit would seek help from various investigative agencies to detect possible frauds and would also provide inputs to others in their probes.

Experts also agree that investigations into a number of corporate frauds, including the high-profile Satyam scam, in the past have shown that many of them could have been detected at an earlier stage by a stronger oversight mechanism.

"It is all available... All the transactions that has happened, everything is online... The filings, financial reporting and registration, everything is online. Transactions (with banks) are happening electronically. So, it is all there," Pilot said.

The minister said that details might be hidden under different names, different subsidiaries, but it is available.

"Digitally, electronically it (data) is all around us. We have to have the sense to mine it. Within SFIO also, some people are working on it (early warning system). Finance Ministry has one unit and we are coming up with one... This will be within the Ministry of Corporate Affairs," he said.

The new division, which would supplement the work of Serious Fraud Investigation Office (SFIO), is primarily aimed to spot early warnings about corporate frauds by analysing the vast amount of electronic data available with the Ministry.

Pilot said that SFIO should be brought into picture "only when there is a larger public interest involved or when something is going to have far reaching implications.

"Every small allegation, if SFIO goes after, it will perhaps lose the novelty," he added.

The new Companies Bill contains special provisions for fraud and grants statutory status to SFIO, which is expected to curb wrongdoings in the corporate world.

"SFIO is empowered to arrest in respect of serious fraud cases. This is a deterrent and one strong step to eradicate fraud," said S Ravi, an eminent CA and independent director on boards of various public companies.

Pavan Kumar Vijay, Managing Director of Corporate Professionals Pvt Ltd, also said that "the establishment of SFIO to investigate the criminal activities of a company and its inclusion in the new Bill itself now strengthens the position of this office.

"Though SFIO existed before the new Bill, granting it statutory sanctity will increase its role and stature in the law," Vijay added. 
PTI