Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

Reliance Capital to probe PwC’s allegations of fraud

Law firm Crawford Bayley & Co likely to be appointed for ‘end use review’ of funds transferred between two group entities.

, ET Bureau|
Jun 18, 2019, 07.46 AM IST
Representative Image
MUMBAI: Reliance Capital is looking to appoint law firm Crawford Bayley & Co to investigate allegations of fraud levelled by auditor Price Waterhouse & Co (PwC), said people with knowledge of the development.

According to the people, the law firm would conduct “end use review” of funds transferred from one Reliance Group entity to another. A spokesperson for Reliance Capital refused to comment. The company had earlier denied any wrongdoing.

A person close to Crawford Bayley told ET that Reliance Capital had approached it, but no final call had been taken on the matter.

Price Waterhouse & Co, an affiliate of PricewaterhouseCoopers, had resigned as the auditor of two entities of the Anil Ambani-led Reliance Group — Reliance Capital and its Reliance Home Finance unit — alleging diversion of funds and fraud. The audit firm that also informed the Ministry of Corporate Affairs (MCA) about the reasons behind its departure.The auditor had alleged that as part of ongoing audit for the financial year 2018-19, it did not receive satisfactory answers pertaining to certain observations and transactions.

“The review is for the 2018-19 financial year, which is the accounting period covered by the audit in relation to which PwC. Crawford Bayley is expected to complete the independent verification and provide their findings within 15 days,” said one of the people. He said the law firm might also look to involve a forensic investigator.

Pathak HD & Associates, the joint auditor in Reliance Capital, is already reviewing these transactions. “Under joint audit, audit firms tend to divide the work and only have limited visibility of each other’s work. Pathak HD & Associates will review the transactions under question and may qualify these in the upcoming audit reports,” said another person close to the development.

According to the resignation letter written by PwC and submitted to the MCA, the auditor had cited Section 143(12) of the Companies Act in support of the move. The section deals with a situation where the auditor seeks some information but doesn’t get it from the company.

Reliance Capital had denied the allegation and said in a statement that there was “no question of ‘diversion’” and that “zero loans and/or liquidity have been provided by any lender in the PwC audit period”.

All resources have been utilised purely to support group debt servicing of Rs 35,000 crore in the past 14 months, the company had said in a statement.

Several audit firms, mainly the Big Four of Deloitte, EY, PwC and KPMG, are relooking at many of their ongoing audits following regulatory action in the audits of IL&FS and its group companies.

Also Read

TRAI warns consumers against fraud

CVC sets up panel to examine bank frauds

Central registry to track frauds in payment systems

CBI unlikely to charge PNB executives with smaller fraud

Razorpay buys fraud analytics firm Thirdwatch

Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service