June 18, 2019

Reliance Capital Likely To Seek Legal Advice From Top Law Firm Which May Probe Allegations Leveled Against It By PwC

[ By Bobby Anthony ]


After facing recent allegations of fraud leveled by Price Waterhouse & Company, Reliance Capital is believed to be looking at seeking at least informal legal advice from a top legal firm which could also probe these allegations.

The development has come almost immediately after Price Waterhouse & Company resigned as the auditor of Anil Dhirubhai Ambani Group (ADAG) companies Reliance Capital and Reliance Home Finance.

No final decision appears to have been taken by ADAG about the matter but it could probably be inferred that that a few leading law firms including Crawford Bayley & Company may have at least been at least informally approached.

Price Waterhouse & Company had resigned as the auditor of ADAG companies Reliance Capital and Reliance Home Finance, alleging diversion of funds and fraud.

The audit firm had also written to the Ministry of Corporate Affairs (MCA) about the reasons behind its resignation, alleging that as part of its ongoing audit for the financial year 2018-19, it did not receive satisfactory answers pertaining to certain transactions by the ADAG companies.

As per PwC’s resignation letter, a copy of which was also submitted to the MCA, the auditor had cited Section 143(12) of the Companies Act in support of it move. This specific section deals with a situation where an auditor had sought some information but did not receive it from its client.

It is anticipated that any of the firms which are probably being informally approached would be expected to complete an independent verification of the accounting carried out during the 2018-19 period as well as provide their findings to ADAG within 15 days.

Presently, Pathak HD & Associates, the joint auditor of Reliance Capital, is already in the process of reviewing some of the transactions in question.

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