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By Divyesh Singh: The Enforcement Directorate (ED) on Wednesday initiated action against IL&FS in connection with its money laundering probe into alleged financial irregularities at the infrastructure development and finance company.
The probe agency initiated the investigation into the alleged financial irregularities at IL&FS on the basis of an FIR filed by the Economic Offences Wing (EOW), Delhi, and a complaint filed by the Serious Fraud Investigation Office (SFIO), Mumbai, against IL&FS Group of Companies and their key managerial personnel.
During the investigation, it was revealed that the Statutory Audit of IL&FS Financial Services Ltd (IFIN) has been made by Deloitte Haskins & Sells LLP for the period from FY 2008-09 to 2017-18 and by BSR & Associates for the period FY 2017-18.
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Chartered Accountants Udayan Sen and Kalpesh Mehta were the engagement partners of Deloitte Haskins & Sells LLP and N Ganesh Sampath was the engagement partner of BSR & Associates.
Deloitte Haskins and Sells LLP and BSR and Associates LLP were appointed by IFIN to make a statutory audit of IFIN and to identify errors, omissions and irregularities in the books of accounts of the company and to ensure financial statements of the company are compliant with the widely accepted accounting rules.
The ED suspects that auditors of IFIN were aware of the funding provided by IFIN to defaulting borrowers through their group companies repeatedly. The auditors were also aware of the NPA (non-performing assets) of IFIN, suppression of provisioning of NPA, non-write off of loan loss investments by IFIN and other dubious and illegal practices being adopted at IFIN through the coterie of the key managerial personnel of the company.
The auditors despite being aware of all the dubious and illegal practices adopted by the Key Managerial Personnel (KMPs) of IFIN for their own personal illegal gain did not report the same despite being statutorily obliged to do so, according to the financial probe agency.
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A per ED, the auditors deliberately and knowingly did not report the true state of affairs of the company and helped in the ever-greening of loans, which resulted in causing loss to the creditors of the company who had lent and invested in the NCDs of the company.
According to records, the IL&FS group companies had an aggregate debt burden of more than Rs 91,000 crore and a series of defaults had taken place between June and September in 2018, threatening to collapse the money markets of India.
This led to the initiation of action against the firms and their auditors.
The Union government took management control of IL&FS and appointed a new board in October 2018 in an effort to control defaults and restore confidence and financial stability in capital markets.
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