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IL&FS Auditors Defend Themselves, Question Justification for Ban

The counsel for the auditors argued that they are neither related to the management of any IL&FS company nor are involved with the day-to-day management of the crippled group that owes close to Rs 1 lakh to the system.

PTI

Updated:June 21, 2019, 9:48 PM IST
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IL&FS Auditors Defend Themselves, Question Justification for Ban
Logo of IL&FS (Infrastructure Leasing and Financial Services Ltd.)

Mumbai: Auditors Deloitte Haskins & Sells and the KPMG affiliate BSR Associates, who are under fire for their alleged laps in the IL&FS scam, Friday questioned the justification for the corporate affairs ministry's demand to seek a five-year ban on them.

The counsel for the auditors argued that they are neither related to the management of any IL&FS company nor are involved with the day-to-day management of the crippled group that owes close to Rs 1 lakh to the system.

The NCLT posted the matter for hearing on July 15.

The corporate affairs ministry had on June 10 moved the NCLT seeking a five-year ban on Deloitte and BSR, who were the auditors of IL&FS Financial Services, and also to appoint a new auditor for the crippled firm.

Following this, Deloitte had resigned as the auditor last week, while BSR did so Thursday. IL&FS Financial Services is one of the 348 arms of the IL&FS group, which went belly up last September. The group got into trouble after many of its subsidiaries began to default since last September and on October 1, the government had suspended its board and taken over the company.

The ministry had also made Udayen Sen of Deloitte, and Kalpesh Mehta and Sampath Ganesh of BSR as respondents to the petitions as they were the signatories of audit reports.

Government counsel Sanjay Shorey said they were made respondents as the auditors they are required to certify the books of its clients and thus would have the knowledge of all financial information and also about the fraud, but failed to do so or chose not to report.

Deloitte was the financial auditor for 2017-18, while BSR was the auditor of the company till June 20.

Meanwhile, the ministry also filed a petition in NCLT seeking to implead 23 new parties after the Serious Fraud Investigation Office (SFIO) submitted its investigation report which implicated them for mismanagement.

The impleadment application include auditors, audit partners, chartered accountants and a few independent directors for operational mismanagement, Shorey said.

According to the impleadment plea, these 23 additional people will be made respondents in the main petition filed last October.

Based on its investigation report, SFIO had filed a complaint in a special court with 30 people were named related with the matter, he said.

Shorey said, of the 30 people, seven were already made respondents in the matter and MCA is seeking to implead the rest are mentioned in the SFIO report. However, the NCLT bench reserved the order.

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