MCA Likely To Ask Serious Fraud Investigation Office Or Registrar Of Companies To Investigate Infosys Allegations

The Ministry of Corporate Affairs (MCA) is likely to depute the Serious Fraud Investigation Office (SFIO) or the Registrar of Companies (RoC) to investigate whistleblower allegations of corporate wrong doing at Infosys.

The MCA and the Securities & Exchange Board of India (SEBI) might even decide to work together, exchange data as well as information which they find during the course of investigation, if a decision is taken to initiate a probe.

As a matter of fact, the SEBI has already started its investigation into allegations of unethical practices and it is also trying to find out if there was any insider trading.

Infosys might have to be investigated about its customer contracts, stock transactions, undisclosed upfront commitments as well as revenue recognition, since the nature of the recent allegations would not just bring the Infosys management under scrutiny, but also the company board itself.

However, at the moment, the MCA is keeping a close watch on Infosys developments to see if there are any violations of the Companies Act and waiting to see what the SEBI reveals.

No decision has been taken yet, though any probe would have to be multi-layered, involving a high degree of collaboration between the MCA and SEBI. It is expected that any Infosys probe might be a case where the MCA and SEBI might benefit from each other’s expertise.

Incidentally, it may be recalled that the MCA and SEBI had signed a memorandum of understanding for data exchange in June.

Among the high-profile cases which the SFIO which reports to the MCA is probing currently are alleged frauds at Religare Enterprises, IL&FS as well as Bhushan Steel.

The SFIO is also probing Deloitte based on a whistleblower complaint. Though Deloitte is the statutory auditor for Infosys, so far there has not been any hint or suggestion of any wrongdoing by the audit firm.