New Delhi: In a fresh case related to fraudulent representation in the books of IL&FS and its key subsidiaries, Deloitte’s former chief executive officer Udayan Sen and two other top officials are under the scanner of the Serious Fraud Investigation Office (SFIO). The CEO and co-officials are being questioned for alleged audit lapses in the books of the infrastructure giant.
“Doubting Deloitte’s fraudulent role in auditing its books and misrepresentation of the financials, we have sought some factual auditing data concerning IL&FS. We think some top officials, including the CEO, had been involved in this matter. So, we are in the process of examining the role of the auditors in this,” a top SFIO source close to the development told Financial Chronicle on Thursday.
Sen and the two others were reportedly questioned on Wednesday over the alleged fraud at Infrastructure Leasing & Financial Services (IL&FS). Deloitte officials were unavailable to comment on this matter.
According to the source, the probe agency under the Ministry of Corporate Affairs had recently received a communique from a Deloitte Haskins & Sells whistle-blower, raising several audit shortcomings in the company’s books. “The letter alleged that the audit firm had recommended a complex structure to the infrastructure firm and that it got a hefty amount as fee from IL&FS,” the source said.
The SFIO is also said to have sought an explanation from Sen, who had left Deloitte in 2015, on allegations made against the Deloitte senior officials. In the complaint, the whistle-blower is learnt to have alleged that Deloitte’s senior leadership was involved in the financial irregularities of the IL&FS and its group entities.
“For the past 10-12 years, Deloitte had benefitted in several ways as a preferred advisor, enjoying substantially high fees in a mutually beneficial arrangement,” said the source.
Two persons in the know said the whistle-blower, having lost faith in the current leadership of the auditing firm, had sent the letter to the regulators. The letter has been sent to several financial regulators like Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi), and the Ministry of Corporate Affairs, they said. “The letter has been shared with Grant Thornton, which is conducting a special audit of the IL&FS group,” said the SFIO source.
