NSEL scam: Two auditors working for EY-linked firm held

Two auditors working for a firm affiliated to Ernst & Young were arrested on Friday by the local police for their alleged role in the NSEL scam.

The Economic Offences Wing (EOW) arrested Amit Kabra and Shrawan Jain of S V Ghatalia and Associates LLP for their alleged role, police sources said.

The duo has been arrested for the alleged lapses in discharge of their duties while valuing NSEL's commodities.

"They were overall internal auditors for entire accounts of NSEL, which includes godowns," said a police official.

In a statement, the firm said that it is "surprised and dismayed" at the happenings and will defend the partners' reputations.

"The action by the department is for a six-year old matter. During this period, we have always extended our full cooperation to the authorities and participated in over 50 meetings with the department," it said.

"We are shocked by the sudden and unwarranted arrest of two professionals associated with Ernst & Young, as it was Statutory Auditor of NSEL, and not that of the exchange platform," an NSEL statement said.

It said that EY had nothing to do with the stocks at the godowns, explaining that distinction needs to be made between auditing the company accounts and 'stock-audit of an exchange'.

It said that stock verification of an exchange is done by buyers, brokers and auditors of the brokers, who visit the warehouses more than 50 times, and had verified the stock availability in those warehouses.