Police today is ill-equipped to deal with large economic scams, says Umranikar, former DGP Maharashtra

Former director general of police, Maharashtra, Jayant Umranikar, feels that the corporate sector and enforcement agencies need greater empowerment to prevent and detect big-ticket financial frauds. This is especially true today given the scale of irregularities involving banks, corporates, shell companies and money laundering; the latest being the PMC Bank.

Umranikar, along with former inspector general of police Avinash Mokashi and corporate consultant Chintan Mokashi, has co-authored ‘A Practical Guide to Prevention, Detection and investigation of Corporate Frauds’. He spoke to Dheeraj Bengrut about the book which will be released on October 18 at Bhahu Institute auditorium, College of Engineering, Pune at 10.30am. Following are excerpts from the interview:

What motivated you to work on the book?

One corporate scam destroys thousands of crores of public wealth. It may exceed the losses sustained by one generation of citizens through normal street and property crimes. If India really wants to become a $5 trillion economy, we need to prevent scams; catch criminals and successfully convict them as the best, preventive measure.

The book is the result of nearly four decades of experience in policing, working in the government sector and my experience after retirement, of being a consultant, advising the private sector for nearly a decade.

I realised that the private sector is equally plagued by corruption and frauds; if not more than the government and public sectors. There was a need to advise the corporate sector on how to prevent or detect frauds and help enforcement agencies on how to detect and investigate corporate frauds.

In the last five years, we have heard so much about big-ticket frauds involving banks, corporates, shell companies and money laundering; the latest being the PMC Bank. This book is a timely intervention to help stem the rot.

How have you and your co-authors approached the subject?

The book is a practical guide and does not dwell much on theory. It presents an introduction to the history of various scams that shook the nation leading to evolution of vigilance mechanisms, serious fraud investigations office, legislations like Whistle-blowers Act, the new Company Act, Money laundering Act, among others.

It explains the working of enforcement agencies and how corporates should cooperate with them in the present regulatory and legal framework.

On the basis of practical experience, it advises on the best practices to prevent and detect economic crimes and corporate frauds.

Corporate frauds are impersonal as they do not affect an individual citizen. Yet, the magnitude of economic damage and subsequent losses to the society are humongous. ‘Eternal vigilance’ is not only ‘the price of liberty’, but also economic prosperity.

Are you hopeful that things will change for the better?

The age-old axiom that ‘prevention is better than cure’ is still valid. Setting up preventive mechanisms, timely action against apparently minor defaults and zero tolerance for corruption, misstatements and for fudging of financial records for short-term gains, can save the loot of public money.

After all, most of the corporates have public shareholding. The book encourages the whistle-blower and advises him on how to go about it. It advises companies on how to prevent sexual harassment at workplaces and the need to have a Code of Conduct.

Importantly, the book also appeals to auditors- internal and statutory- and not hide behind ‘disclaimers’, but to pursue the irregularities noticed, to their logical conclusion including reporting to the statutory authorities or enforcement agencies, when needed.

What improvements would you like to suggest in police operations?

The police today are overworked and handicapped by the lack of expertise to deal with largescale economic offences and corporate frauds. They know little about the internal working of companies; how to conduct forensic audits or how to read between the lines of an annual report and financial statements.

This book will help them understand the corporate world and how to use the available legal and regulatory framework to bring the culprits to book.

It shows the way experts and forensic auditors could be co-opted to further investigation. Reciprocally, it will help corporates to interact with the police and help them in investigations.

The book is a virtual guide for the prevention, detection and investigation of corporate frauds.