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IL&FS case: ED searches Deloitte, KPMG’s premises

New Delhi, May 11, 2023

A week after the Supreme Court allowed investigation to continue against Deloitte and KPMG’s Indian subsidiaries, the Enforcement Directorate (ED) on Wednesday searched premises of audit firms in Mumbai in connection with alleged frauds in the IL&FS case.

While details of the probe were not immediately available, both the firms confirmed that ED officials had visited their offices. When contacted, a spokesperson for KPMG said, “BSR & Associates LLP (BSR) was inducted as the joint auditor for IL&FS Financial Services (IFIN) in November 2017 for the financial year ended March 31, 2018.

BSR jointly signed with Deloitte Haskins and Sells LLP the audit report of IFIN for the year ended March 31, 2018. Officials from ED visited at Mumbai NESCO office in relation to (an) inquiry pertaining to IFIN. We have co­operated and provided all necessary support to ED.”

A Deloitte spokesperson added, “This routine inquiry is in respect to an ongoing matter regarding a former client and we continue to extend our full cooperation to the authorities.”

The auditors are accused of not reporting the true picture in accounts, resulting in IL&FS facing a crisis.

In October 2018, the government superseded the board of IL&FS and appointed a new board, which has set about seeking to clear dues of around Rs 91,000 crore and realise some of the funds from sale of assets in hundreds of subsidiaries.

Subsequently, SFIO in 2019 filed a criminal case against the auditors which was taken up by ED to probe money laundering charges. The agency had by then already registered an enforcement case under PMLA based on an FIR registered by the Economic Offence Wing of Delhi Police.

ED had also arrested some of the directors on the boards of IL&FS subsidiaries IFIN and ITNL. During the probe, role of auditors had come under the scanner. In 2019, BSR & Associates, a local associate of KPMG, and Deloitte were slapped with a five year ban by NCLT, an order that had been set aside by the Bombay High Court, only to be quashed by SC. In 2020, in the case of IFIN, NFRA had banned Deloitte CEO Udayan Sen from undertaking audit assignments for seven years and ordered to pay a fine.

[The Times of India]

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