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Investigation firms are unexplored deep waters of the legal ecosystem that play a significant role in solving a case and preventing an offence by gathering timely and crucial evidence, conducting forensic investigations, field intelligence, due diligence, asset trace investigations etc.
When we take a note of scams of the recent past, be it the Satyam scam or Nirav Modi-PNB rip-off or even the proceedings against IL&FS, one question comes to mind-could they have been avoided?
The answer is 'Yes'. Everyone has an option of exhausting the services of investigation firms that only a few responsible organisations consider. The investigation industry has been flourishing in India growing at a pace of 30% annually and is also anticipated of reaching Rs. 1,800 crore by 2024.[1] These firms offer a wide range of services starting from corporate investigations, due diligence, forensic analysis, e-discovery and case specific investigations.
In India, every listed company is required to comply with the disclosure obligations as mandated by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, which undergoes amendment from time to time for serving the changing needs. This is in addition to the enduring regulations for overcoming instances of insider trading,[2] frauds and alike practices.[3]
Economic offences have taken a sudden stride in today’s market, that too with the far-reaching technology developments. In a recent survey conducted by PricewaterhouseCoopers, 51% of the Indians discerned a hiked risk of cybercrime over the past two years; and 61% of the economic crimes in India were perpetrated by employees within their organization.[4] Whenever a disruption is detected in the normal course of events, a preliminary understanding of the detected situation is required for assessing it violating any law or policy.
Investigation firms come to everyone’s rescue. Investigations are the primogenitor in nipping the evil at the bud before it is aggravated into a fully grown-up plant. They act as effective vaccines against unwanted loss, frauds and embarrassing raids, search and seizures. Most importantly, a timely exemplary investigation would also demonstrate good housekeeping action in case of investing in a new project or any accusation that might escalate against the company.
Investigative services aid in detecting the root cause of a complaint preventing further losses (financial, reputational etc.), which paves the path for its clients to “learn lessons” by ensuring compliance to the applicable laws. All in all, these firms not only help in sustaining the goodwill of the company but also make an appearance as a valued asset to the company.
Owing to the entropic nature of investigations, there is no predetermined template or strict procedure conducting them. However, a few broad guidelines are generally followed in this regard:
1. Collation of information
2. Verification of information from the source
3. Review of information
4. Structuring the scheme of investigation
5. Engagement of experts, if needed
6. The Interviews, wherever needed
7. Drawing inferences
8. Preparing the investigation report
In cases of corporate investigations, the above broad guidelines are to be read along-side the internal policies of the concerned client corporate entity.
The symbiotic relationship between the investigation and legal industry is at a nascent stage in India, which has a great potential to be developed to a mutual benefit and larger client's needs.
[1] Figures released at a conference of the World Association of Detectives in Delhi [2] See, SEBI (Prohibition of Insider Trading) Regulations 1992 [3] See, Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 [4] ‘Global Economic Crime Survey 2016: An India Perspective’ (PricewaterhouseCoopers)