ICAI probing NSEL auditor

However, the regulator is awaiting details of the matter pertaining to Financial Technologies (India) Ltd (FTIL) and its auditor Deloitte Haskins & Sells

The Institute of Chartered Accountants of India (ICAI) has launched a probe against Mukesh P Shah & Co, the auditor of crisis-hit National Spot Exchange Ltd (NSEL), after receiving a formal complaint. However, the regulator is awaiting details of the matter pertaining to Financial Technologies (India) Ltd (FTIL) and its auditor, Deloitte Haskins & Sells, to decide whether this case, too, should be probed.

“We recently received a formal complaint against the auditor of NSEL and started an inquiry. For FTIL, we have written to FMC (Forward Markets Commission), seeking details of audit and accounts. We will take a decision after we collect all data against FT (Financial Technologies),” ICAI President Subodh Kumar Agrawal told reporters on Friday.

He added ICAI had already written to Mukesh P Shah & Co, seeking its response against the allegations raised in the complaint. “The auditor has been asked to respond to our notice within 21 days,” Agrawal said, refusing to divulge the name or nature of the complainant. NSEL, promoted by the Jignesh Shah-led Financial Technologies (India) Group, is already being probed by various regulators and investigative agencies, with regard to a Rs 5,600-crore payment default and persistent violations of various regulations at the exchange.

In case the auditors were found guilty during the probe, there was a provision for them to face a penalty of up to Rs 5,00,000, along with action such as being delisted from ICAI, Agrawal said.

Meanwhile, widening its probe into the NSEL issue, the ministry of corporate affairs (MCA) has sought financial reports and other details from the spot exchange's parent firm FTIL and other related entities. Earlier, the ministry had asked the registrar of companies Mumbai to collect the details of NSEL.

"As far as MCA is concerned, we will look at all companies and all entities in question; we have asked for reports from the RoC for all the numbers, figures, balance sheets and financial statements and whether there has been any company law violations," Minister for Corporate Affairs Sachin Pilot told reporters.

Apart from NSEL, FTIL has also promoted the country's top commodity bourse Multi Commodity Exchange, stock exchange MCX-SX, entities engaged in clearing corporations and exchange technology solutions, etc.

Pilot assured his ministry would initiate action as soon as it secured the reports from RoC on all the companies under question. "If we believe there has been substantial violation of the company law, facts will prevail and we will take action and I can assure you anyone who has done any violation will be taken to task and law will take its course," he said.

So far, MCA has not made any recommendation on the NSEL matter. Finance Minister P Chidambaram had said NSEL had been violating rules from the first day and the matter would be looked into by MCA, the Central Bureau of Investigation and FMC, among others.