Rs 13K-cr 'sham' transactions were audited, given clean chit: Srei promoter

Concerted effort to financially kill group by using auditors to mis-categorise transactions: Srei promoter

The Rs 13,000-crore transactions tagged “fraudulent” by consultancy firm BDO India — the transaction auditor appointed by the administrator — were previously audited and given a “clean chit”, said Srei promoter Hemant Kanoria.

Kanoria’s comments came amid the recent disclosure by Srei Infrastructure Finance (SIFL) alongside its results that said the administrator had received audit reports indicating in Srei Equipment Finance (SEFL) there were transactions amounting to Rs 13,110 crore that were fraudulent under Section 66 of the Insolvency and Bankruptcy Code. They included transactions amounting to Rs 1,283 crore determined as “undervalued”.

In a statement shared with Business Standard, Kanoria said, “BDO, which is not even a nationally recognised audit firm, appointed by the administrator has tagged over Rs 13,000 crore transactions as fraudulent. All these loans were previously audited and given a clean chit. They are also loans that are being paid on time with full interest.”

The current process being run by the administrator is a concerted effort to financially kill Srei by using auditors to mis-categorise transactions as fraudulent, significantly lowering the bid valuations, said Kanoria.

Periodically, SIFL and SEFL had been informing stock exchanges about reports from BDO India indicating transactions as “fraudulent in nature”. The transactions pertained to the pre-corporate insolvency resolution process (CIRP) period.

Kanoria said that the statutory auditors have approved the entire infrastructure finance loan book of the company as fraud, which is absurd, and a testament to the auditors playing to the gallery.

“A critical question that arises is whether it can be assumed that all loans sanctioned and disbursed by the company over the decades, audited by many sets of auditors, regulators, bankers, professionals were all wrong?” asked Kanoria.

An example he cited was of the Ghaziabad Aligarh Expressways, where a case of fraud had been filed in the National Company Law Tribunal and then withdrawn, as the full payment had come.

Meanwhile, the resolution plans for Srei companies are due to be submitted by November 25 after the consolidated committee of creditors extended the deadline.

SIFL and SEFL were admitted for CIRP on applications filed by the Reserve Bank of India in October 2021 after the boards of companies were superseded by the central bank and an appointed administrator.