India Makes Advances in the Fight Against Fraud and Corruption

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Martin Kenney
Managing Partner of Martin Kenney & Co., Solicitors

When news began filtering through to our network of international fraud and asset recovery lawyers that India was in the latter stages of drafting a Bankruptcy Bill, our ears immediately pricked up.

At ICC FraudNet, we know how important bankruptcy laws can be in preventing and tackling corrupt practices. Therefore in terms of engendering confidence from both investors as well as providing remedy for financial malpractice, the importance of the Bill cannot be underestimated. While India is one of the fastest growing economies in the world, it is no secret that it has struggled to overcome historically high levels of bribery and corruption.

We studied the draft Bill and on a pro-bono basis we set about compiling our own white paper detailing suggestions that would increase the Bill’s effectiveness. 

One of the amendments suggested was the addition of a chapter on cross-border insolvency cooperation. We recommended moderating some aspects of the Bill to bring it in line with current international standards. These amendments would enable Indian insolvency office holders to recover assets squirrelled away abroad, outside the Indian jurisdiction: an imperative move for justice. In fact, UNCITRAL (United Nations Commission for International Trade Law) has created an excellent Model Law on Cross-Border Insolvency (1997) and a Legislative Guide on Insolvency Law (2004). Recently, the UNCITRAL National Coordination Committee for India was established to deepen its engagement and be more receptive to views from India.

Much of India now knows the case of Kingfisher magnate Vijay Mallya, who has attracted international interest. Indian media has reported official sources stating the Central Bureau of Investigation (CBI) had filed various charges, including money laundering, and that an arrest warrant had been issued. Mallya left the subcontinent for the U.K. in March, owing about $1 billion to creditors. The Indian authorities are seeking his extradition.

Mallya sought to take advantage of the old, flawed Indian insolvency laws to delay and avoid creditor actions. In light of this case and others like it, India’s government acknowledged the need to address the failings with this new legislation.

Yes, the subject of bankruptcy is far from being chic. Yes, it is complicated and appears to be of interest to just the few specialists who work within its legislative constraints. But nothing could be further from the truth. Bankruptcy is of massive public interest and a central part of the legal infrastructure of any healthy and successful economy.

Indeed, World Bank figures suggest that in India creditors take 4.7 years to recover 25 percent of dues from a bankrupt firm, while in the U.S. they get 80 percent and without the inordinate wait. It is rumored that there are 60,000 ongoing bankruptcies in India awaiting resolution.

The new legislation will make those running companies take their liabilities seriously, and see unviable businesses wound up speedily, saving shareholders and creditors from greater loss. This natural selection process will ensure survival of the fittest and investment is available for those enterprises seeking to grow.

To take on the daunting task of writing this new legislation is a testament to those involved. To recognize that there may be scope to improve the draft is evidence of their determination to make the Bill as effective as possible, and we are honored to be able to assist.

On May 5, the Lok Sabha lower house passed the draft Bill, whereupon it moved to the upper house, Rajya Sabha. On May 11 it was passed by the Rajya Sabha and will soon be enacted. We hope that some of our suggestions will make it into one of the Bill’s subsequent amendments.

These are exciting times for the Indian business community, who will now be able to conduct their commerce safe in the knowledge that they will have the support and protection afforded by a piece of modern, fit-for-purpose legislation. A strong bankruptcy law for India, that prevents tactical bankruptcies and garners confidence within the international community, will buoy investor confidence. This is a classic example of how the private and public sectors can come together and work as one with mutually complimentary goals and ambitions.

Martin Kenney is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative & asset recovery practice focused on multi-jurisdictional fraud & grand corruption cases. He is Co-Chair of ICC FraudNet's Task Force India www.martinkenney.com | @MKSolicitors

Shreyas Jayasimha is Advocate and Co-Founder of AARNA LAW, Bangalore and New Delhi, and National Co-ordinator, UNCCI. He is Co-Chair of ICC FraudNet's Task Force India www.aarnalaw.com

Fighting Fraud in India: An Interview with the ACFE Mumbai Chapter President

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“A mix of integrity, hard work and constant learning is the best policy.” This motto has driven Arpinder Singh, CFE, throughout his professional life and as president of the ACFE India – Mumbai Chapter since its formation in February 2011.

Why did you decide to enter into the anti-fraud field?

There were/are few anti-fraud professionals in the Indian sub-continent to effectively address the growing menace of complex frauds. As a chartered accountant and law graduate, I’ve worked in a number of countries and found it exciting and rewarding. India has become one of the fastest emerging economies due to evolving regulation and increased governance, so I realized that my skills would be apt to address this challenge in the larger interest of the industry.

Why did you become active with the chapter and the board?

The change in crime trends in general and technology fraud in particular. As a fraud investigator I have worked on global assignments with both proactive and reactive work involving detection and recommending frameworks to deter fraud. This gave me insights on working with global conglomerates that have a presence in various sectors. The gap I saw in emerging countries like India was that there were not enough skilled people to address this issue while working in multi-jurisdiction scenarios. To address this gap some of us came together to form the chapter so we could give professionals in this area a forum to exchange views and enhance learning.

What are the benefits of serving as a chapter leader?

The seemingly simple benefits are in fact very precious. For example, the chapter is an avenue to meet like-minded people, network with the who’s who of the fraud investigations industry and mentor aspiring fraud fighters. It has kept me connected with young as well as experienced professionals. The anti-fraud professionals remain abreast with the latest trends in frauds through the ACFE Mumbai chapter platform. I have also had the opportunity to meet and learn from other chapter leaders when I have visited other countries on work.

Do you have any advice for other chapter leaders?

Through my experience of leading the ACFE Mumbai chapter, I have realized there is so much more we can do to bring value to this profession. The more we connect, at all levels, the more enriching the experience we can have.

We must respond to all requests from budding forensic professionals on any queries to keep the interest alive. There must also be constant learning opportunities to keep professionals updated on the latest changes in our field.

What do you like to do for fun outside of work?

I enjoy sports and am particularly appreciative of cricket, as it is an apt example of how each player must bring his or her own expertise to the game to create the best possible chances for winning the match. This further helped me in strengthening the team. I am planning to organize a cricket tournament for ACFE Mumbai chapter members.

Read Arpinder's full interview on ACFEChapterNews.com.

Fighting Fraud in Mumbai

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Alani Mundie, CFE
ACFE Law Enforcement Liaison

With more than 20 million residents and an immense array of flavors, scents and sights, Mumbai, India, is a city that overwhelms the senses. Sidewalks teeming with tourists, shoppers and vendors selling scarves, artisan crafts, fruits and jewelry border the even more crowded streets filled with Mumbai’s noisy traffic. Cars, rickshaws, busses, motorcycles and bicycles travel within inches of each other with little regard for marked traffic lanes, making transportation in Mumbai an adventure of its own.

On a recent trip to Mumbai, John Gill, J.D., CFE, ACFE’s VP-Education, and I were able to experience the chaotic traffic adventure en route to a meeting with the ACFE Mumbai Chapter. Amidst the bustling streets, the chapter is busy supporting its membership and anti-fraud efforts in the region. Chapter President Arpinder Singh, CFE, Partner and National Director of Fraud Investigation and Dispute Services at Ernst and Young, has grown the Mumbai Chapter significantly since it was formed in January 2011. Along with Chapter Secretary and Treasurer Amit Rahane, Associate Director of Fraud Investigation and Dispute Services at Ernst and Young, the two chapter leaders are actively expanding the anti-fraud training opportunities available to their members.

There are currently three ACFE Chapters in India: Mumbai, Delhi and Bangalore. The Mumbai Chapter is one of the largest, with more than 220 members from various professional sectors such as the big four accounting firms, banks, regulatory agencies and law enforcement. As the chapter continues to grow and attract professionals from in and around Mumbai, Singh and Rahane are working to keep pace with their impressive membership growth by providing an array of anti-fraud training opportunities. Chapter events for this year include a seminar on banking and insurance fraud and a conference that tackles several pertinent issues, such as: trends in retail fraud in India; the role of technology in preventing and detecting frauds; bribery and corruption; proactive fraud prevention; and many other important fraud-related topics.   

In meeting with our Mumbai Chapter, we learned of the growing presence of anti-fraud awareness in India and experienced first-hand the tremendous role that chapters have in enhancing that awareness locally. There are nearly 1,100 ACFE members in India and as our Indian membership continues to expand, we look forward to working with Indian chapter leaders to support the growth of anti-fraud efforts throughout the country.

Pictured (from left to right): Vinay Garodiya, Senior Manager, Fraud Investigation & Dispute Services, Ernst & Young; Amit Rahane, ACFE Mumbai Chapter, Secretary, Treasurer and Associate Director, Fraud Investigation & Dispute Services, Ernst & Young); Nandkumar Saravade, Director, Citi Security and Investigative Services, South Asia; Arpinder Singh, ACFE Mumbai Chapter President and Partner and India Head Fraud Investigation & Dispute Services, Ernst & Young; John Gill, ACFE VP - Education; Alani Mundie, ACFE International Law Enforcement Liaison; Satish Shenoy, Jt. General Manager,Corporate Audit Services, Larsen & Toubro Ltd.; Mukul Shrivastava, Mumbai Chapter Board Member and Executive Director, Fraud Investigation & Dispute Services, Ernst & Young