Centre fails in getting investors money back

Mumbai: The government recently said that “FIRs have been lodged against directors of 78 firms which vanished after raising Rs 310 crore from investors through IPOs and is making efforts to trace their whereabouts as well as to file cases against them under the provision of the Indian Penal Code (IPC). These firms were among the 228 firms that stole around Rs700-900 crore from investors in 2002.

The government was replying to an unstarred question by an MP who wanted to know what the ministry of company affairs was doing about dubious firms that were duping investors.
Virendra Jain of the investor organisation, Midas Touch Investors Association that took the case of the vanishing companies to court said, the impression given in the answer, in the question hour, is that these are latest figures and culprits are being hauled up in an efficient manner.

“Nothing could be more divorced from facts.”The government has been giving virtually same figures and information to Parlia-ment in the question hour repeatedly in 2004, 2008, 2009 and last week to name a few instances.Nine companies were added after 2007 and three came after the formation of the Co-ordination and Monitoring Committee (CMC).
The CMC clearly urged Sebi, DCA, Company Law Board and Reserve Bank of India (RBI) to work seriously towards getting the investors’ money back and taking all necessary steps, including attachment of properties of directors of vanishing companies.

However Mr Jain said Sebi has only debarred the directors from capital market for five years (which expired in 2006 or 2007).  “Despite the appointment of the Co-ordination and Monitoring Committee, no credible attempt has been made to recover the money, nor has any action been initiated against any merchant banker, statutory auditor, banker etc.,” he added.