Two ex-auditors held in NSEL scam

Six years after the payment default took place on the National Spot Exchange (NSEL), the Economic Offences Wing (EOW) of the Mumbai Police on Friday arrested two former partners of SV Ghatalia & Associates (SVGA).

SVGA was the statutory auditor of NSEL between FY10 and FY12, and is a network firm of global accounting major EY.

The EOW produced both the partners before the Sessions court, which sent the duo to police custody till the next hearing, scheduled for Monday. EOW officials could not be contacted for comment.

“We are surprised and dismayed at the sudden course of action taken by the EOW and will vigorously defend the reputation of our partners and our firm. 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,” said a statement from SVGA.

“We reiterate that our audit of NSEL’S financial statements for the years ended March 31, 2010, 2011, 2012 were in accordance with the auditing standards generally accepted in India. We were succeeded by another auditor for the financial year 2012-13. NSEL defaulted in its settlements in August 2013,” the SVGA statement said.

“We are confident of the quality of our audits and hopeful that our cooperation will be taken into account by the relevant authorities,” it added.

“We are shocked by the sudden and unwarranted arrest of two professionals associated with EY, as it was the statutory auditor of NSEL, and not that of the exchange platform. EY had nothing to do with verification of these stocks,” said a statement from NSEL.