How much did we know about the Nirav Modi and Mehul Choksi scamIJ Answers are needed
How much information did banks and its officials have of the gigantic scam pulled off by diamentere Nirav Modi and his uncle Mehul ChoksiIJ According to news reports coming from the Central Vigilance Commission, red flags had been raised of the large amounts of loans given to Modi, Choksi and Jatin Mehta’s Winsome Diamonds. Indeed, now that the scam has been exposed, there were rumours floating in the market of massive frauds being undertaken. So the obvious question is: Why was action taken so late and how can the system be improved so that action can be taken faster in the futureIJ
Oddly enough, one of the ways to improve the system is to quash it of criminal defamation that is prevalent in India. This is used by promoters of companies indulging in fraud to bully news organisations into dropping stories. Of course, while respondents should have a method to go after cases of genuine defamation, threats of jail terms must end. Stories that expose fraudulent practices by the media should be encouraged. Several newspapers and magazines, including columns in this newspaper, had highlighted how Winsome Diamonds was a problem waiting to occur. There is also the need to strengthen investigative bodies and institutionalise the investigation of white-collar corporate fraud. Far too often in India, greedy promoters, who have indulged in fraud, have gotten away because of late detection and while officers in the CBI and ED do a superb job under trying circumstances, most investigations in the country are reactive rather than proactive. On this front, while India did establish the Serious Fraud Investigation Office on the lines of the Serious Fraud Office in the UK, we have much to learn from the way Western nations go after white-collar fraud. Far too few people in India are working on far too many cases. Fraud cases, large and small, need to be investigated and when red flags are raised, they should not be ignored, which is what happened in this case. The problem in India is that there is no fear of punishment among officers who deliberately ignore or go slow on cases. The problem with the justice system has been exploited by scamsters well before Modi to loot public funds and be far away from the arms of Indian law by the time the scam is caught. Undoubtedly, such fraudsters had inside information of the investigations and planned their flight when they knew the noose was tightening. While the media has a role to play in exposing such frauds, the way the news spreads can also compromise informations and give criminals an opportunity to escape like what happened with Vijay Mallya, whose flight seemed to happen in slow motion. If public confidence is to be restored in the Government and Indian investigative agencies, this cannot continue to happen.