T
he problem of siphoning o a company’s funds by
promoters and/or controlling share holders is one
of the main challenges to good corporate governance
in India. This is caused not only by the concentration
of ownership but also by weak regulatory and enforce-
ment mechanisms, and macroeconomic factors as ex-
plained in the rst part of this book.
Generating Funds for Siphoning
For siphoning o a company’s funds, the rst require-
ment is to generate funds that can be siphoned o. The
most commonly used modus operandi for generation
of such funds is by over-invoicing purchases and by
booking fake expenses. Instances of over-invoicing of
purchases have come to notice not only in the cases
of domestic purchases but also with regard to major
3
Siphonin ...