Moily orders serious fraud probe into RadiaÂ’s companies - Indian Express Corporate Affairs Minister M Veerappa Moily has ordered an investigation by the Serious Fraud Investigation Office (SFIO) into alleged flouting of rules by companies owned by controversial corporate lobbyist Niira Radia. This follows recommendations made by the Registrar of Companies (ROC), New Delhi, which scrutinised documents of seven companies belonging to her group. The minister was said to have sought an explanation from officials for the six-month delay in bringing the ROC report to his attention. The regional director received the report six months ago, but it reached the ministerâ€™s desk only on Thursday, official sources said. The investigation by the SFIO is to be completed in four months. Nine companies are under the scanner, including the seven examined by the ROC. They are Vaishnavi Corporate Communications, Vaishnavi Advisory Services, Leisure Clubs India, Claro Consultancy, Magic Airlines, Maansi Agro, Crownmart International India, Vitcom Consulting and Neucom Consulting. â€œIn view of the prima facie contraventions observed during the examination of documents filed and replies of the company..., the level of allegations, magnitude of the web of transactions inter se the group companies and the bigger corporates, the Directorate and the nature of consultancy contracts executed and implemented by the group companies, the ROC, Delhi, has recommended either inspection or investigation in respect of these companies,â€ says the ministryâ€™s record, prepared on the basis of the ROCâ€™s report. The ROC had examined balance sheets of seven companies for 2008-09 and 2009-10 and reported non-compliance with several sections of the Companies Act, 1956. There was no proper maintenance of statutory registers, non-disclosure of interest by directors, non-disclosures in the balance sheets, non-compliance with accounting standards, and several unapproved transactions. Former TRAI chairman Pradip Baijal and former secretary of the Department of Economic Affairs C M Vasudev were directors in Radiaâ€™s company Noesis Strategic Consulting Services Pvt Ltd. According to official documents, during 2008, Baijal and Vasudev were paid remunerations of Rs 24.45 lakh and Rs 28.56 lakh respectively. Radia issued a statement on October 31, 2011 saying she had decided not to renew client mandates, and to exit the business of communications consultancy. Her staff exited, and the nine companies under the scanner now exist as rump entities. In its report to the ministry, the ROC observed: * All the companies were incorporated with Niira Radia and Karuna Menon as promoters except for Maansi Agro Ltd in which the two were inducted as directors subsequently. * These companies earned revenue from consultancy. However, the nature of consultancy was not disclosed in the balance sheets. Accounting policy relating to accountal of revenue was not disclosed (either)... The companies have accounted for the bulk of revenue from among group companies by providing staff support services... The nature of consultancy and staff support services need to be examined thoroughly as there are webs of transactions among group companies, and circulation of funds in the garb of professional income and expenses, as well as administrative expenses and rent paid cannot be ruled out. * Some of the companies have accepted share application money from group companies but no shares have been allotted there against. Prima facie these appear to be unsecured loans accepted in the garb of share application money. * Vaishnavi Advisory Services, Noesis Strategic Consulting Services, and Vaishnavi Corporate Communications have accounted for bulk revenue from consultancy business from Tata Group of Companies and Unitech. These companies have also written off debts amounting to Rs 2.36 crore, which requires in-depth examination... * Vaishnavi Corporate Communications has made substantial donations amounting to Rs 52.13 lakh. The names of the parties, reason for donation and compliance with Section 293 A (prohibitions and restrictions regarding political contributions) need to be explored. * The books of account and other records of Vitcom Consulting and Neucom Consulting also need to be examined in view of related party transactions and major revenue earnings by these companies from consultancy. * Leisure Club India had obtained a secured loan worth Rs 12 crore from HDFC Bank and this has been utilised for purchase of property. The company did not disclose such loans in the balance sheet... These need to be examined thoroughly.