New Delhi: The corporate affairs ministry may look to debar Deloitte Haskins and Sells over alleged malpractices in the IL&FS controversy, a media report published on Sunday morning has indicated.According to an IANS report, the ministry is currently mulling taking action against the well-known auditor under Section 140 (5) of the Companies Act.“This extreme action is being warranted after Deloitte’s alleged misdemeanours and conduct in the IL&FS case,” the report said.Section 140 (5) of the Companies Act States:“(5) Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the Tribunal either suo motu or on an application made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company to change its auditors.”The Wire could not independently verify the media report’s clams. However, if the Narendra Modi government chooses to take action against Deloitte, it would be the second time ever that a major auditing firm is censured. The last time it happened was with Price Waterhouse in the aftermath of the Satyam scam.Also read | IL&FS Mess: SFIO Investigation Throws Up New Leads on Insolvent Bank’s DealingsA Deloitte spokesperson, in response to a questionnaire sent by IANS, said: “The investigations on the company IFIN are in progress and we are cooperating fully. We reaffirm that we have conducted our audits in accordance with the Standards on Auditing and applicable laws and regulations.”According to the media report, Deloitte has maintained that defaults at IL&FS began in May 2018 – during which the group’s three main arms were audited by competitors like E&Y and KMG. Deloitte played a part in auditing IL&FS group companies up till 2015-16 and in 2016-17.“Trying to maintain distance from the opaque architecture of the 347 subsidiaries – majority of them overseas – Deloitte has clarified that they were audited by various smaller firms, most of them being non Big Four. It has also emerged that during the many years that Deloitte was auditing the group, secured loans were sufficiently collateralized which in turn was independently valued by reputable parties such as Knight Frank or realty and N M Raiji,” the report said.
