Sucheta Dalal

Among the best known financial journalists in India, in 2006, Ms Dalal was awarded the Padma Shri, India government’s third highest civilian award, based on her outstanding investigative journalism since the early 1990s.

Her 35 years of investigative reporting spans the Harshad Mehta scam, CR Bhansali scam, and expose of Enron among others. She was the Financial Editor at The Times of India and has also written for Business Standard, The Economic Times, Indian Express and Financial Express among others.

She served as a member of SEBI’s primary market advisory committee, the Narayana Murthy Corporate Governance Committee and as a member of Investor Education and the Protection Fund of the Ministry of Corporate Affairs .

She has co-authored the best-selling book ‘The Scam: From Harshad Mehta to Ketan Parekh’ and a biography of A D Shroff, a Titan of Finance.

P.S. Her writing is one of the major reasons that has influenced my liking for current business affairs. Then came the stage of obsession. And now it's more of a passion. Many of my students and well wishers say that I've made it into a subject.

What is The Way Forward for CAs in India

I will give below some important exchanges of thoughts with two other very respectable CAs in the profession about Satyam, Big Four and our profession. 

Satyam - The irony about Satyam was S Gopalakrishnan, Partner, PwC, ex-Lovelock & Lewes, Hyderabad, the man who signed the Satyam annual reports till 2008, and who was held responsible was a member of ICAI AASB (ICAI - Auditing &  Assurance Standards Board). And he was considered to be big audit quality. A lot of lessons need to be learnt from IL&FS too. I think it is bigger than Satyam.
 
Joint Audit - Joint Audit not only of banks but in other organizations is required for transparency and independence. This will increase professional opportunities and overall fees too.
 
But will it stop another PNB scam? There were eight joint auditors. But in spite of that Nirav Modi and Mehul Choksi made a fool of everybody. Bypassed the system through SWIFT. Looted the bank in crores and crores of unearned income. And escaped to London and Antigua (now Dominica). Could we do anything? 
 
ICAI Regulations - The problem is with some ICAI regulations which have never been touched. 
 
ICAI cannot punish a firm ever. End of the story. That rule has not been changed even after Satyam when SEBI had to come in after a long time and punish. But it's still lying in court. 
 
A member can be punished. An easy thing to do. But never the firm. This is the root of the problem.
 
But there has to be enough room for ICAI, now NFRA, when the firm has to be punished. IL&FS is the biggest scam - corruption - greed case ever. Rs 1 lakh cr. So don't you think KPMG and Deloitte need to be hauled up? 
 
NFRA has punished Deloitte's managing partner, Udayan Sen. But is that enough? What about the firm? Check up what's happening against the Big Four in the UK and China. And how they have cleaned up the mess.

The UK has changed the regulator. And scrapped the old one. Financial Reporting Council. FRC. The Audit, Reporting and Governance Authority is a proposed audit regulator intended to be established in the United Kingdom to replace the Financial Reporting Council.
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For an act of one person should an entire firm be banned? A firm can set up process and procedures...but no one can control human being. For this reason, the definition of Asset uses the word Control. For one corrupt minister you don't pull down the entire government. There should be process and justice delivery should be time bound. The US sets a good example. It is not that in the US partners in firms are not corrupt. I suggest and support a strong system.
 
There should be thorough investigation of the process of Deloitte or KPMG. Firms should be punished for shortfall in their process, not for individual partners taking calls.

Every Child Matters

Every Child Matters

Why so many children died at Indian residential schools.

It’s time for Canada to get up from its slumber and recognize these are children. It’s time to come together as a nation and hold accountable those who hurt them.

These children were taken away from their families, their culture, their lands - never to return home again. This discovery is a painful reminder of the legacy of the residential school system in Canada,

Unmarked and previously forgotten graves. An unthinkable loss spoken about but never documented. Many of Canada’s most notorious residential schools sit amid sprawling cemeteries of unmarked children’s graves. But a true figure will never be known as death records – if they were kept at all – were often lacking even basic personal information.

The deadliest years for Indian Residential Schools were from the 1870s to the 1920s. Kuper Island Residential School, located near Chemainus, British Columbia, saw the deaths of nearly one third of its student population in the years following its opening in 1889. The school would come to be nicknamed Alcatraz for its remote location and appalling conditions.

Call to examine St. Paul's Indian Residential school site after children's graves found in Kamloops.

Call to examine St. Paul's Indian Residential school site after children's graves found in Kamloops

New IL&FS Management Denied Vital Information to Forensic Auditor Grant Thornton (GT)

Inspired by Sucheta Dalal

 

GT very recently submitted the forensic audit report of IL&FS Engineering and Construction Company Limited (IECCL) which has exposed scandals and internal collusion to conceal wrongdoing and losses a decade back from 2011-12.

 

Despite a new board of directors of senior retired bureaucrats for three years, crucial data re: company and business has not been shared with GT.

 

Erroneous, incomplete and inadequate data were provided. Bank statements not provided in 40 cases. Statements in 122 out of 163 accounts given.

 

The entire top management cabal of IL&FS, Ravi Parthasarathy, Hari Sankaran, Arun Saha, K Ramachand, Mukund Sapre (MD of IECCL), MD Khattar and key managerial personnel (KMPs), used external and personal emails for official communication, not made available to GT.

 

The report is based on 40% of available data with IECCL. Project related data is 80% of total costs incurred and formed a critical part of GT’s review but just 22% available and provided to GT. The key information was not available for any project. This provides assurance that information is complete and no comprehensive analysis of projects required.

 

GT has received 25%-30% of data and 22.5% pertaining to projects. Naveen Agarwal, CFO said all the available data has been provided. Surely, he couldn’t have done that without specific authorisation by the board of directors!

 

So who is protecting the former management of IL&FS which burnt up so much of public money? Remember, the ministry of corporate affairs (MCA) has appointed this board of directors, comprising largely retired bureaucrats to work in public interest to recover money owed to pension funds, government institutions, bond-holders and a large number of private entities.

 

They are: chairman Uday Kotak, CS Rajan, GC Chaturvedi, Srinivasan Natarajan, Nand Kishore and Malini Shankar (mainly retired IAS officers and a former comptroller and auditor general, while the chairman is a billionaire banker).

 

They are supported by a set of very expensive lawyers, consultants and advisers who have first claim to any recovery. GT is silent about whether it raised this issue with the board of directors, the new audit committee and chairman Uday Kotak.

 

But the report is quite explosive as it exposes the rotten dealings of the previous management headed by Ravi Parthasarathy (who presided over this massive conglomerate for 25 years and stepped down just before its payment issues erupted in the public domain) and his followers. The team loyal to this management and still employed by IL&FS group companies is determined to bury wrongdoing, to cover up its own role in the dubious dealing. But who will hold the new management accountable for failure to cooperate with GT’s forensic audit team?

 

Since GT has clearly been instructed (by the new board?) to submit the report with less than half the information it asked for, there appears to be a conspiracy to bury all that is inconvenient and protect those responsible for losses of over Rs 40,000 cr that may never be recovered.

 

To be continued

  

An exit window to cryptocurrency holders

All the private cryptos, except any issued by the state, would be prohibited in India. That was announced earlier.

Now, an exit window to cryptocurrency holders is being thought as banning will deal a blow to investors holding them for years.

The framework may have a grace period of three to six months for investors before prohibiting the possession, trading, mining, and issuing of cryptos.

Issues relating to cryptos, consequences of banning and possible substitutes of blockchain technology — an advanced technology Bitcoin uses – have been discussed.

Concerns were raised by stakeholders, including Reserve Bank of India (RBI) on virtual currencies.

The potential damage in the case of a ban has been discussed.

The committee is expected to give its inputs, which will be examined by the ministry and department concerned before finalising the Cabinet draft note on cryptos.

Unlike fiat currencies, cryptos were not controlled by any central authority.

The new regulations will give clarity on controlling such currencies, which could be misused.

However, there is a difference in controlling and banning the asset/currency, which the framework will address.

Even if certain forms of cryptos are declared illegal, some grace period has to be given, or else it will create havoc in the market

The government had been receiving suggestions highlighting advantages and disadvantages of cryptos.

Some are valid. For example, a resident Indian can remit money abroad legally for many purposes, including investment in overseas assets.

Hence, they may trade cryptos through overseas brokerages. Restricting crypto trades will impact such regulations.

The government recently showed some openness to currencies like Bitcoin. And said that India is not shutting out all options when it came to cryptos or blockchain and fintech.

The cryptocurrency market is booming and is the reason the bill has delayed, especially when Bitcoin touched $61,000.

RBI has flagged concerns about cryptos owing to financial stability, which was not in sync with the government’s latest position.

However, more deliberations are required.

The RBI had banned such currencies through an order, which was struck down by the Supreme Court last year.

In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold Rs 10,000 cr ($1.4 billion) in crypto-investments as per industry estimates.