ICAI holds 2 auditors guilty in GTB scam case

Accounting regulator the Institute of Chartered Accountants of India (ICAI) today said it has found two auditors guilty of professional misconduct in the Global Trust Bank (GTB) scandal.

A final notice would be soon sent to S Gopalakrishnan, facing trial in Satyam scam case, before pronouncing him guilty in the GTB scam, the ICAI said in a statement.

P Rama Krishna and Manish Agarwal are the CAs who were found guilty.

Rama Krishna has been found guilty of "professional misconduct falling within the meaning of clauses (6), (7),(8) and (9) of the second schedule of the Chartered Accountants Act 1949", the statement said. ICAI has "recommended the concerned high court that his name should be removed for 5 years from the list of members", it added.

Agarwal is held guilty under clause (7) of the Act and is recommended to the concerned high court that his name be removed from its list of members for three years.

The Reserve Bank had asked ICAI to probe GTB scam. The Global Trust Bank became sick due to mounting bad debts of over Rs 1,400 crore and was taken over by Oriental Bank of Commerce.

Internal investigations had revealed that GTB had taken high credit exposure in certain accounts even exceeding exposure norms prescribed by the Reserve Bank.

A study of non-performing assets of GTB revealed that deliberate attempts were made to camouflage the positions of bad assets by making fresh loan sanctions to their sister or allied concerns including some of the front companies.