Ministry of Corporate Affairs files complaint in IL&FS scam. | In a process to bar 9 auditors and audit partners.
The Ministry of Corporate Affairs (MCA) has authorised its regional units to begin proceedings against 9 auditors as well as audit partners that comprises of BSR Co. and Deloitte Haskins & Sells (DHS).
“The regional director is allowed to initiate proceedings under section 140 (5) of the Companies Act before NCLT against DHS, BSR, Udayan Sen, Kalpesh Mehta, Sampath Ganesh, Shrenik Baid, Rakesh Jain, Nishit Udani, Anju Rawat, Payal Rathod, AP Shah and AP Shah and Associates ‘for their role in perpetuating the fraud and seek debarment’,” the ministry said in an order.
- The MCA also authorised regional units to bar the entities after they were charged with colluding with the management and IL&FS.
- The auditors and audit partners were fraudulently falsifying books of accounts.
- The MCA has asked its regional director to include the auditors in the ongoing legal proceedings before the National Company Law Tribunal.
The regional director was told to include the auditors in the proceedings under sections 241 and 242 of the Companies Act pending before the NCLT and seek interim attachment of their movable and immovable properties, “including lockers, bank accounts and jointly held properties.”
Serious Fraud charges
The SFIO filed charges against 30 individuals and entities, including the statutory auditors and audit partners, with fraud under section 447 of the Companies Act and sections regarding cheating under the Indian Penal Code.
The SFIO stated that the auditors “connived, colluded with the coterie” to conceal material information and fraudulently falsified the books of accounts and thereby financial statements from FY13-14 to FY17-18.
It said they “knowingly did not report the true state of affairs of the company,” particularly the negative net owned funds and the negative capital to risk asset ratio, which resulted in losses for those who invested in its non-convertible debentures.