New Delhi, March 15: The government on Friday said it has found 87 companies across the country to have vanished after raising funds totalling Rs 342 crore through public issues and a majority of such firms were from the state of Gujarat.
Besides, 87 other companies are also being probed by the government agencies for duping the general public through illegal Multi-Level Marketing (MLM) or Ponzi schemes and West Bengal tops this list with as many as 73 such entities.
The market regulator Sebi has also detected as many as 669 companies to have duped the investors of Rs 7,435 crore through illegal collective investment schemes, Corporate Affairs Minister Sachin Pilot informed the Lok Sabha.
The entities are classified as 'vanishing companies' if they cease to file their balance sheets and other documents after raising capital and the whereabouts of their offices or directors become untraceable.
In the Ponzi or MLM investments, the companies generally raise the money from general public and ask each investor to lure others into these schemes with a promise of huge returns. However, the operators disappear after some time, leaving the gullible investors in lurch.
Giving details of the entities running such Ponzi schemes, as also that of the vanishing companies, Pilot said that Chief Ministers of various states have been requested to issue directions to their respective police authorities to take action against the erring companies.
Pilot said he has also written to Finance Minister to facilitate increased surveillance by RBI over unauthorised NBFCs (Non Banking Finance Companies) to tackle the menace of Ponzi schemes.
"The Ministry takes prompt action against errant companies as and when complaints are received against them. At present, action has been initiated on complaints received against 87 companies relating to MLM/Ponzi schemes," Pilot said.
In reply to another query on vanishing companies, the Minister said that the government had initially identified 238 such entities that have raised money through public issues.
Out of these, 119 companies were put under a 'watch list', as they began filing their balance sheets and other documents with the Registrar of Companies or stock exchanges. Out of the remaining 119 companies, 32 companies are presently under liquidation, while 87 others have been classified as 'vanishing companies', Pilot said.
"The total amount of public issues made by these 87 companies is Rs 341.90 crore (approximately)," he said.
As per the state-wise list, 26 companies out of the total 87 such untraceable firms were registered in Gujarat.
Gujarat is followed by Andhra Pradesh (13), Tamil Nadu (10), Maharashtra (9), Delhi (5), West Bengal (5), Madhya Pradesh (5), and Uttar Pradesh (4) for such companies.
Regions such as Chandigarh, Karnataka have two such firms each, while one company each are from Orissa and Punjab. FIR has been filed against all the 87 companies and prosecutions has been filed against 85 of them.
The state-wise list of the companies indulging illegal Ponzi schemes is topped by West Bengal (73), followed by Delhi and Tamil Nadu with five each such companies. Besides, two such companies were found in Rajasthan and one each in Karnataka and Uttar Pradesh.
Regarding illegal Collective Investment Schemes, Pilot said 669 companies have come under Sebi's scanner for conducting operations in violation of the market regulator's norms for such investments. These companies collected an amount of about Rs 7,435 crores by duping investors.
"Out of these companies, 75 have been wound up and the money refunded to the investors. 552 companies were prosecuted (and) convictions have been secured in 124 cases," Pilot said.
"Cheating of investors by unscrupulous companies takes many forms," Pilot said, adding such activities include vanishing after raising money through public offers, collective of public deposits in violation of Companies Act, floating sham Collective Investment Schemes in violation of Sebi norms, collection of money by unauthorised NBFCs and resorting to Ponzi or MLM schemes.
"The Ministry has constituted a Steering Committee to develop a Fraud Prediction Model aimed at generating alerts for prevention of fraud and malfeasance. It is also proposed to revamp the existing Market Research & Analysis Unit in the Serious Fraud Investigation office to enable it to function as an intelligence unit," the Minister said.
Pilot further said that various regulatory agencies are also taking steps to sensitise the public against such schemes, while newspaper editors are also sensitised to exercise caution in accepting advertisements pertaining to acceptance of deposits of un-incorporated bodies.
While Sebi is conducting various investor awareness programs in this regard, the RBI is in process of undertaking a comprehensive campaign aimed at alerting the public against falling prey to Ponzi schemes and other monetary malpractices.
To a separate query, the minister informed the lower house that a total of 7,167 cases have been filed for failure by companies to submit balance sheets and profit and loss account statements, in the last three years.
Out of these, 3,097 cases were filed for "non-filing of balance sheets and profit and loss account" in 2011-12. While 1,981 and 2,089 cases were filed for the same in 2010-11 and 2009-10 respectively.
"...every company is required to file a copy of the balance sheet and profit and loss account with the Registrar of Companies (RoC) within 30 days from the date on which the above documents were so laid before the Annual General Meeting (AGM)," Pilot said.
