Monthly Archives: March 2014

Corporate Frauds Investigations In India Need Scientific Technologies And Methods

Corporate Frauds Investigations In India Need Scientific Technologies And MethodsCorporate frauds and scientific evidence and investigations cannot be separated in the present times. Whether it is e-discovery or cyber forensics, the complicated corporate frauds of present times cannot be solved without using scientific investigative methodologies. There is no more pressing requirement than to strengthen the cyber forensics and cyber crimes investigation capabilities of India in the contemporary cyber world. The cyber forensics trends and developments in India 2013 by Perry4Law and Perry4Law’s Techno Legal Base (PTLB) have shown that Indian lacks drastically on these counts.

This does not mean that companies can relax in this regard. E-discovery and cyber law due diligence requirements for Indian companies are now well established. Perry4Law and PTLB have been maintaining for long that corporate fraud investigations in India need techno legal and holistic due diligence. E-discovery and cyber forensics investigation are two of the most important aspects of a corporate frauds investigations in India. Unfortunately, both cyber forensics and e-discovery legal issue are grossly ignored in India by Indian companies and the law enforcement agencies.

With the present techno legal framework and its non compliance by Indian and foreign companies, the cyber litigations against foreign websites would increase in India in the near future. Even the foreign investors in e-commerce and technology ventures of India are required to follow cyber law due diligence requirements (PDF). The legal mood is very clear and cyber due diligence cannot be ignored by Indian companies anymore. Very soon mandatory cyber security breach notifications would be enforced in India as well. Further, cyber security breaches in India would also raise complicated cyber security issues for the companies as most of them are not complying with techno legal requirements of Indian laws and regulations.

There is no escape from the reality that white collar crimes and financial frauds are increasing in India. Further, IT and cyber frauds in Indian companies are increasing. By their very nature these high profile crimes affect corporate sector. Indian companies are also facing increased corporate frauds, financial frauds, white color crimes and technological frauds. Indian government reacted immediately and it formulated the under Indian Companies Act, 2013 (PDF).

The Ministry of Corporate Affairs (MCA) has also issued some Rules under Chapter XIV of Indian Companies Act, 2013 pertaining to Inspection, Inquiry and Investigation by Indian Authorities and Serious Frauds Investigation Office (SFIO). The Suggestions Regarding Rules Pertaining to Inspection, Inquiry and Investigation (SFIO) by Perry4Law (PDF) has already been provided by us in this regard. Now even the Central Government permission is not required by Central Bureau of Investigation (CBI) to prosecute senior bureaucrats for corruption cases monitored by Supreme Court of India.

Corruption among corporate world has also necessitated use of e-discovery and cyber law due diligence by and against Indian companies. For instance, Indian and foreign corruption and technology related due diligences in India has gained importance. Corruption and the regulatory measures to prohibit corrupt practices have assumed new meaning with the passing of the Jan Lokpal and Lokayuktas Act, 2013 by the Parliament of India. Similarly, the Serious Frauds Investigation Office (SFIO) has also been given wide powers under Indian Companies Act, 2013.

The future corporate frauds investigations in India would rely upon scientific technology and methods. Our law enforcement officials must be well trained in e-discovery and cyber forensics methodologies. Similarly, companies must also think seriously in the direction of complying with the techno legal requirements of India laws.