Three auditing firms that audited the books of now infamous and crisis hit National Stock Exchange (NSE) and its promoter group, Financial Technologies Limited have come under the scanner of the Ministry of Corporate Affairs for alleged lapses in auditing the books of NSE.
According to a senior official, the ministry has issued show cause notices to three auditors seeking explanation for the lapses in auditing the books of NSEL and Financial Technologies (India) Ltd (FTIL). The notices have been sent for violations of Companies Act.
Jignesh Shah-led FTIL is the promoter of National Spot Exchange Ltd (NSEL). In the wake of the `5,600 crore payment crisis at the bourse, these entities alongwith those related to them have come under the scanner of multiple agencies for various violations.
Sources said, the Ministry has sought clarifications from the Law Ministry, Sebi and Forward Markets Commission (FMC) to finalise action against ‘gross violations’ by FTIL and related entities.
The ministry has found ‘gross violations’ by FTIL board on corporate governance matters and is looking at the issue of ‘fit and proper’ status of directors, among others.
NSEL promoters are found to have violated the provisions of the Companies Act.
An inspection of NSEL books by the ministry had found that the exchange’s board failed to perform its duties towards shareholders in violation of regulations.
The interim report of inspection, carried out by the Registrar of Companies (RoC), Mumbai, had found corporate governance failure at multiple levels, including lack of transparency, integrity, compliance and ethics.
The Corporate Affairs Ministry has issued show cause notices to three auditors related to the FTIL and NSEL matter. They are Deloitte Haskins & Sells LLP, Mukesh Shah & Co and S V Ghatalia & Associates.
“We are not aware of any communication to us, as referred to in the news reports. However, as is our practice, we fully co-operate on any inquiries from government agencies,” Deloitte Haskins & Sells LLP said in a statement.
Deloitte Haskins & Sells is FTIL’s auditor.
Queries sent to Mukesh Shah & Co and S V Ghatalia & Associates, auditors of NSEL, did not elicit any response.