Mumbai: The noose is tightening around fraudsters with a growing number of companies wanting to invest in India or have invested in India, taking the help of investigative firms to unearth corporate fraud and to perform due diligence.
These companies literally play Sherlock Holmes in tracking down frauds and fraudsters and finds a way out for the victims of the fraud.
It’s business, says Reshmi Khurana, managing director and country head of investigative agency Kroll, has increased 50 per cent since 2012 in fraud related investigations of portfolio companies of private equity investors. This means a 30 per cent increase in hiring this year.
She said that India is low down in the priority of equity investors beca-use foreign investors perceive Indian companies lack in corporate governance that lead to frauds.
Of the $320 billion raised globally, barely $3.5 billion came to India and this was down from $6.8 billion in 2011. India is second only to Africa in fraud cases.
To strengthen its areas of investigation and due diligence, Kroll tied up with BMR Advisors that analyses internal financial records of companies.
In recent times, private equity firms have been facing unique fraud related challenges, said Ms Khurana. Companies from the US are particularly vulnerable as they are exposing themselves to regulatory issues including the US Foreign Corrupt Practices Act (FCPA).
Sanjay Mehta, BMR Advisors said the internal and external review elements are only valuable if there are no conflicts of interest among the due diligence providers and investigators.
