Icai sets up panel to study sys­temic is­sues in IL&FS cri­sis

Financial Chronicle - - FUNDAMENTALS, POLITICS - FC BUREAU

CHAR­TERED ac­coun­tants' apex body Icai on Thurs­day said it has con­sti­tuted a nine­mem­ber panel to study the sys­temic is­sues in the IL&FS cri­sis, amid the gov­ern­ment in­ten­si­fy­ing ef­forts to ad­dress the prob­lems at the di­ver­si­fied group.

The set­ting up of the com­mit­tee by the Icai comes days af­ter it sought ex­pla­na­tion from au­dit firms that car­ried out statu­tory au­dit works at the IL&FS Group in the past few years.

The In­sti­tute of Char­tered Ac­coun­tants of In­dia (Icai), which has more than 2.95 lakh mem­bers, has also writ­ten to the Re­serve Bank of In­dia and the Se­ri­ous Fraud In­ves­ti­ga­tion Of­fice seek­ing de­tails about IL&FS is­sue.

In a re­lease is­sued on Thurs­day, Icai said it has set up a high power group that "would study the sys­temic is­sues in the IL&FS mat­ter and sug­gest re­me­dial mea­sures and im­prove­ment in the sys­tem and any other mat­ter in­ci­den­tal thereto".

The nine-mem­ber panel is headed by S B Zaware and has two past Icai pres­i­dents — Ved Jain and Nilesh Shivji Vikam­sey—as mem­bers.

Ac­cord­ing to an of­fi­cial at the in­sti­tute, Jain was the pres­i­dent of the in­sti­tute dur­ing the time of Satyam Com­puter Ser­vices cri­sis in 2008 and that he has ex­pe­ri­ence of han­dling such sit­u­a­tions.

Like in the case of In­fra­struc­ture Leas­ing & Fi­nan­cial Ser­vices (IL&FS), the gov­ern­ment had also su­per­seded the board of erst­while Satyam Com­puter, which was em­broiled in one of the big­gest ac­count­ing scams.

On Wed­nes­day, the Icai said that based on the re­sponses from the RBI and the SFIO, it would be fast­track­ing its in­ves­ti­ga­tion on the role of mem­ber /firm of the in­sti­tute al­legedly in­volved in terms of the disciplinary mech­a­nism.

On Oc­to­ber 1, the gov­ern­ment su­per­seded the board of IL&FS and ap­pointed a six-mem­ber board with Uday Ko­tak as the non-ex­ec­u­tive chair­man.

In a sig­nif­i­cant de­vel­op­ment, the Na­tional Com­pany Law Tri­bunal (NCLT) has al­lowed the new board of di­rec­tors to "re­place" di­rec­tors at sub­sidiaries, joint ven­tures and as­so­ciate com­pa­nies of IL&FS.

As per the cor­po­rate af­fairs min­istry, IL&FS Group has around 348 direct or in­di­rect sub­sidiaries, as­so­ciate com­pa­nies and joint ven­tures. Fur­ther, the NCLT, in an or­der dated Oc­to­ber 9, said that "ac­tions of the newly-ap­pointed di­rec­tors done in the good faith, in the in­ter­est of the com­pany, var­i­ous stake­hold­ers, in­clud­ing pub­lic at large, the same are pro­tected".

Mean­while, the newly con­sti­tuted board of IL&FS, headed by veteran banker Uday Ko­tak, will meet for the sec­ond time Fri­day to de­cide on the fur­ther course of ac­tion plan for the cashcrunched com­pany, a source said. In the maiden meet­ing held on Oc­to­ber 4, the sixmem­ber board un­der­took an ini­tial as­sess­ment of the ground re­al­ity of the com­pany and dis­cussed the way for­ward.

"In to­mor­row's meet­ing, the board will now be look­ing into var­i­ous is­sues, in­clud­ing fund rais­ing plan, for the com­pany," said one of the source. The firm needs an im­me­di­ate cap­i­tal in­fu­sion of Rs 3,000 crore and is also plan­ning a Rs 4,500-crore rights is­sue.

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