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Criminal complaint lodged against NSEL auditors

Auditors involved with the NSEL and its associates are going to face heat after complaints have been filed by investors with the economic offences wing (EOW).

October 28, 2013 / 10:00 PM IST
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After the management and borrowers, it is the auditors who are going to face heat. NSEL investor Pankaj Saraf has filed a criminal complaint with the Economics Offences Wing against audit firms SV Ghatalia and Associates and Deloitte Haskin and Sells to examine their roles as auditors of Financial Technologies and NSEL respectively.

In its complaint, he has mentioned the Forward Market Commission's (FMC's) show cause notice sent on Oct 4, which has raised several issues regarding unauthorized funding, risk of credit to defaulters, and mis-utilisation of margin money. The forum has raised these similar issues with the disciplinary committee of ICAI against the statutory auditors of NSEL, SV Ghatalia and Associates.

A similar complaint has been lodged by the NSEL Investor Forum against the statutory auditors of Financial Technologies, Deloitte Haskin and Sells, alleging that they never highlighted the deficiencies and misappropriation of funds and allowed this fraud to take place.

Meanwhile, another criminal complaint has been filed against Ernst and Young (EY) raising questions on the risk management report they prepared on behalf of Geojit Comtrades on NSEL in September 2012.

In this report, according to the investors, they had given a clean chit to NSEL. Among some of the issues, EY, in their report, have said that warehouses were accredited under WRDA act, which was factually incorrect says the investor in its official complaint. A system of collection of daily mark to market margins as open position which was wrong, they add.

However EY in a statement to CNBC-TV18 says that the report was prepared based on specific requirements and highlights the key risks associated with commodity financing in India, categorically saying that allegations in this case are incorrect.

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