White-Collar Crime Investigations: Legal Milestones Financial Year 2020-21 and a Look Ahead

THE YEAR THAT WAS

The year 2020 commenced with India being ranked 86th in the Corruption Perception Index of Transparency International (a leading not-for-profit organisation) – a six-rank drop compared to the previous year. The banking sector was severely hit by fraud and corruption-related issues, involving alleged misappropriation of approximately INR 600 billion. Consequently, enforcement and investigative agencies remained busy through the year along with a deeper scrutiny by the regulators.

Given the global impact of the COVID-19 pandemic and various nationwide lockdowns, the year witnessed a shift in the approach and methodology of conducting forensic and internal investigations. Investigators adapted quickly to online methods of collecting data, conducting interviews etc. On the legislative front, much movement was seen, with major developments such as the notification of the Lokpal (Complaint) Rules 2020; enactment of the Companies (Auditor’s Report) Order, 2020 (CARO, 2020) and amendment of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR).

MAJOR DEVELOPMENTS IN THE FINANCIAL YEAR 2020-2021

• Major Investigations in India

  The Central Bureau of Investigation (CBI) registered 596 cases, and around one-third of the cases were related to bank frauds. Amongst these cases, a few high profile matters included the alleged fraud concerning, (a) the then fifth largest private sector bank of India (and its MD and CEO, among others); (b) a Hyderabad based engineering and construction company for approximately INR 79 billion; and (c) a Mumbai based export and trading company for approximately INR 36 billion.

  The CBI also booked companies and their officials under the newly enacted corporate criminal liability provisions of the Prevention of Corruption Act, 1988. A notable instance was the booking of a Delhi based import/export company on the allegation of providing illegal gratification to the officials of the Inland Container Depot for extending undue favors for inspection and clearance of import assignments. In another case, the CBI also booked a few Kolkata, Delhi and Hyderabad based project and infrastructure companies on allegations of bribery to get undue advantage in securing bids from the Export Promotion Council of Handicrafts.

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