SEBI started a fraud investigation after the IL&FS crisis came to light last year, following defaults by group companies, which together have over Rs 90,000 crore in debt. (Photo: IL&FS Annual Report)

BSR & Associates Resigns As Auditor Of IL&FS Financial Services

KPMG India affiliate BSR & Associates LLP has resigned as an auditor of IL&FS Financial Services Ltd. and will continue to defend itself in the National Company Law Tribunal on petitions filed by the Ministry of Corporate Affairs.

"We confirm that BSR & Associates LLP has resigned as auditors of IL&FS Financial Services on June 19, 2019. We had received a notice dated May 13, 2019, from the board of directors of IL&FS Financial Services seeking an explanation on our removal as auditors," the audit firm said in a statement on Thursday.

BSR & Associates said it had filed a written response to the notice from IL&FS Financial Services on May 29.

"While IL&FS Financial Services has not communicated its decision to us as yet, we do not intend to impose ourselves as auditors of the company. Our resignation will allow the company to appoint another auditor so that the work on the audit for FY19 may progress.

"We believe, we have discharged our duties in good faith and have acted in a bona fide manner and we will continue defending ourselves," said BSR & Associates.

"We have also filed our replies to the petitions and applications filed by the Ministry of Corporate Affairs with National Company Law Tribunal and we will continue defending ourselves vigorously. As the matter is subjudice, we are unable to provide any further comments at this time," the KPMG-affiliated audit firm said.

A large number of individuals and entities formerly associated with the crisis-hit IL&FS may soon face action by Securities and Exchange Board of India for their role in an alleged fraud at the group.

SEBI has been conducting an in-depth investigation into the role of several entities and individuals, including for suspected violation of disclosure and corporate governance norms. According to officials familiar with the matter, many of them would soon face stringent penal action for hurting the interests of minority shareholders and the overall capital market with their fraudulent actions.

The SEBI probe started after the IL&FS crisis came to light last year, following defaults by group companies, which together have over Rs 90,000 crore in debt.

On Wednesday, the Enforcement Directorate arrested two former IL&FS executives in connection with its money laundering probe in the IL&FS fraud case.

Arun K Saha, the former joint managing director of IL&FS Financial Services, and K Ramchand, former managing director of IL&FS Transportation Networks Ltd, were arrested in Mumbai under the Prevention of Money Laundering Act.

Bloomberg Quint

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