Elementary, we need professional sleuths – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-editorial/elementary-we-need-professional-sleuths/articleshow/95646078.cms

Synopsis

The probe to collect evidence and establish the crime, culminating in the conviction, offers lessons for India. Sebi has had scant success in securing convictions. There is no alternative to painstaking investigation.

Last week, a US federal court sentenced now-defunct blood-testing startup Theranos founder Elizabeth Holmes to 11 years in prison for duping investors and patients. Civil charges by the US Securities and Exchange Commission (SEC) precluded criminal charges. The probe to collect evidence and establish the crime, culminating in the conviction, offers lessons for India. Sebi has had scant success in securing convictions. There is no alternative to painstaking investigation. India’s Serious Fraud Investigation Office (SFIO) and agencies like the Central Bureau of Investigation (CBI) need more professionalism. Enthusiasm alone won’t do. It is also important to distinguish between a bad corporate decision that leads to business failure and a criminal act that warrants punishment. Holmes also admitted to approaching Wall Street Journal (WSJ) owner Rupert Murdoch to try and quash the story. It is informative to know that WSJ went ahead with the story that opened the investigative floodgates.

In 2018, Holmes agreed to settle massive fraud charges in a settlement with SEC that stripped her of majority control, among other penalties. The regulator’s view that innovators who seek to revolutionise an industry must tell investors the truth about what their technology can do today, and not just what they hope it may do someday, is valid. Lack of credibility in governance of companies will erode investor confidence.

India also needs sturdy laws and regulatory systems to maintain quality and safety, say, in Big Pharma. Apparently, there have not been successful prosecutions in other instances of alleged adulteration due to shoddy investigation. When a crime goes unpunished, people lose faith in the criminal justice system. India must make investigation processes professional and ensure speedy delivery of justice.

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