Capacity deficit in forensics, analytics to tackle corporate fraud is a huge opportunity for private sector and PPP: IG, NIA
Updated: Jul 17, 2015 05:20:47pm
New Delhi, July 17 (KNN) The amendments in Prevention of Corruption Act, which are pending in Parliament, would further strengthen the legal framework to deal with corporate fraud, P V Rama Sastry, IG of Police, National Investigation Agency, Ministry of Home Affairs said today adding that the government recognized the importance of curbing corporate fraud.
Shastry highlighted the challenges in dealing with corporate fraud as the legal regime matures and sees it not just as an ethical issue but one of regulation and compliance, the cost of which is extremely high.
In a Special Address at a workshop on ‘Forensics of Fraud Investigation’, organized by FICCI, Sastry said the magnitude of the challenge calls for public private partnership and training and capacity building of the enforcement agencies to tackle the problem, especially in areas such as forensics, digital data and big data analytics.
“The need of the hour was to objectively assess the cost of implementing a formal compliance program against the high cost of tackling fraud and its impact,” he said.
Sastry said that the government recognized the importance of curbing corporate fraud. Hence, it enacted the Companies Act 2013, which comprehensively focuses on fraud risk management and prescribes stringent punishment upon violation of its provisions. He added that the amendments in Prevention of Corruption Act, which are pending in Parliament, would further strengthen the legal framework to deal with corporate fraud.
He further stated that in the last two to three years there has been a sea change in India’s legal regime, which now looks at corporate fraud as compliance, regulatory and enforcement issue, rather than just an unethical practice. He added that the cost of non-compliance has increased manifold.
Speaking about the challenges, Sastry said that there was a capacity deficit in forensics and analytics in the public and private sectors. This presented a huge opportunity for private sector. He suggested that training and capacity building could be undertaken in Public Private Partnership mode to counter corporate frauds.
Taking a cue from The US Foreign Corrupt Practices Act (FCPA), which prohibits businesses from bribing foreign officials, IG National Investigation Agency said with increasing cross-border business activities, the Indian government was also formulating a legal framework which would encourage foreign investments and create a business-friendly environment.
On the occasion, Sastry released a FICCI-EY paper on forensics of fraud investigation.
In his theme address, Kartikeya Nath, Director, Fraud Investigation & Dispute Services (FIDS), EY, the knowledge partner of FICCI for the workshop, said that effective due diligence could help to mitigate risks related to business references and other customers, and enable a company understand the past track record of third parties in their commercial transactions. In this regard, forensic technology can help in the risk management functions of organizations by creating a competitive advantage for them to improve their business performance. He added that financial services sector, had become more prone to corporate fraud in the recent past.
Information today is readily available in public domain, said Nath and added that it enabled a person to make informed decisions. Also, the new government’s agenda of making citizens IT-enabled would ensure that information was readily available to investors and corporates and would give a new dimension to due diligence.
According to EY’s Fraud Survey 2015 to assess the reality of the threat of fraud, bribery and corruption across the region, Businesses are operating in an exceptionally challenging environment, but management is under increased pressure to find new ways to grow their business. Furthermore, manipulation of financial results is prevalent and fast track techniques for rapid growth may lead to unnecessary risk-taking behavior. However, effective compliance is a requirement for sustained success.
Sumeet Gupta, Director, FICCI, said that FICCI has initiated capacity-building programmes and workshops as an attempt to increase awareness about white collar crimes. According to FICCI’s ‘India Risk Survey-2015’, ‘corruption, bribery and fraud’ was perceived as the top most risk by corporates. This workshop is a step in the direction of addressing such risks, he added. (KNN Bureau)
Shastry highlighted the challenges in dealing with corporate fraud as the legal regime matures and sees it not just as an ethical issue but one of regulation and compliance, the cost of which is extremely high.
In a Special Address at a workshop on ‘Forensics of Fraud Investigation’, organized by FICCI, Sastry said the magnitude of the challenge calls for public private partnership and training and capacity building of the enforcement agencies to tackle the problem, especially in areas such as forensics, digital data and big data analytics.
“The need of the hour was to objectively assess the cost of implementing a formal compliance program against the high cost of tackling fraud and its impact,” he said.
Sastry said that the government recognized the importance of curbing corporate fraud. Hence, it enacted the Companies Act 2013, which comprehensively focuses on fraud risk management and prescribes stringent punishment upon violation of its provisions. He added that the amendments in Prevention of Corruption Act, which are pending in Parliament, would further strengthen the legal framework to deal with corporate fraud.
He further stated that in the last two to three years there has been a sea change in India’s legal regime, which now looks at corporate fraud as compliance, regulatory and enforcement issue, rather than just an unethical practice. He added that the cost of non-compliance has increased manifold.
Speaking about the challenges, Sastry said that there was a capacity deficit in forensics and analytics in the public and private sectors. This presented a huge opportunity for private sector. He suggested that training and capacity building could be undertaken in Public Private Partnership mode to counter corporate frauds.
Taking a cue from The US Foreign Corrupt Practices Act (FCPA), which prohibits businesses from bribing foreign officials, IG National Investigation Agency said with increasing cross-border business activities, the Indian government was also formulating a legal framework which would encourage foreign investments and create a business-friendly environment.
On the occasion, Sastry released a FICCI-EY paper on forensics of fraud investigation.
In his theme address, Kartikeya Nath, Director, Fraud Investigation & Dispute Services (FIDS), EY, the knowledge partner of FICCI for the workshop, said that effective due diligence could help to mitigate risks related to business references and other customers, and enable a company understand the past track record of third parties in their commercial transactions. In this regard, forensic technology can help in the risk management functions of organizations by creating a competitive advantage for them to improve their business performance. He added that financial services sector, had become more prone to corporate fraud in the recent past.
Information today is readily available in public domain, said Nath and added that it enabled a person to make informed decisions. Also, the new government’s agenda of making citizens IT-enabled would ensure that information was readily available to investors and corporates and would give a new dimension to due diligence.
According to EY’s Fraud Survey 2015 to assess the reality of the threat of fraud, bribery and corruption across the region, Businesses are operating in an exceptionally challenging environment, but management is under increased pressure to find new ways to grow their business. Furthermore, manipulation of financial results is prevalent and fast track techniques for rapid growth may lead to unnecessary risk-taking behavior. However, effective compliance is a requirement for sustained success.
Sumeet Gupta, Director, FICCI, said that FICCI has initiated capacity-building programmes and workshops as an attempt to increase awareness about white collar crimes. According to FICCI’s ‘India Risk Survey-2015’, ‘corruption, bribery and fraud’ was perceived as the top most risk by corporates. This workshop is a step in the direction of addressing such risks, he added. (KNN Bureau)
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