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Richa Mishra

New Delhi , Feb. 14

THE Serious Fraud Investigation Office (SFIO) has filed almost 16 cases against Daewoo Motors India Ltd (DMIL) before the designated court that considers company cases.

With this, the SFIO proposes to bring its investigations to an end. According to official sources, some of the issues on which the cases have been filed include siphoning of funds to related companies, transfer of funds to parent company, Daewoo Corporation of Korea, and over-invoicing.

The case has been filed at the designated courts in Delhi. The SFIO had sought the Ministry of Company Affairs' permission to initiate prosecution against the company.

It has approached the Ministry for appointing one of its officers as a company prosecutor to take up company cases, the sources said.

A high-power team of the Ministry, which was set up to examine the investigation report of the SFIO on the company, has suggested initiating prosecution against DMIL after following the due process of law. The team in its report endorsed SFIO's recommendations for initiating prosecution against the company for non-maintenance of records and disposal of assets without shareholders' approval.

Further, it has recommended that the company and its officers in default should be punished under the Indian Penal Code for falsification of accounts and records for the withdrawal of working capital. Further, the team has also pointed out the violation of conditions imposed by the Union Government on inter-corporate deposits.

According to Ministry sources, the committee has suggested a probe on issues such as over-invoicing of capital goods imports, investment in shares and securities and the role of auditors.

Design Auto, Bonanza Biotech reports submitted

The SFIO has submitted its report on Madhya Pradesh-based Design Auto Systems Ltd and Bonanza Biotech, the two companies accused of manipulating share prices, to the Ministry of Company Affairs. Official sources told Business Line that the investigations have revealed that the two entities indulged in price manipulation.

Both were allegedly involved in fraudulently issuing shares worth Rs 100 crore to each other in 2002. The cases were referred to SFIO in December 2003.

However, the Indore Bench of the Madhya Pradesh High Court in the matter of Design Auto had granted an interim stay in January 2004, which had resulted in delays in proceedings for both the cases, as they were interlinked, the sources said.

Once the stay was vacated, the investigations were carried forward. Besides, no specific time limit was prescribed for completing the investigations.

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