June 14, 2019

SEBI, Ministry of Corporate Affairs Probing PwC's Resignation As Auditor Of Reliance Capital, Reliance Home Finance

[ By Bobby Anthony ]


Capital market regulator SEBI and the Ministry of Corporate Affairs (MCA)have begun investigating into Price Waterhouse & Company’s (PwC) resignation as auditor of the Anil Dhirubhai Ambani Group (ADAG) owned Reliance Capital and Reliance Home Finance.

Stock exchanges have been asked to collect all necessary information including trade details as well as statements made by the three entities.

SEBI, the MCA and the exchanges are also likely to seek additional details from PwC and the two ADAG companies, if needed.

PwC resigned as auditor with effect from June 11, 2019, citing unsatisfactory response to "certain observations" made by it as a part of the ongoing audit for fiscal 2018-19, according to regulatory filings made by the two ADAG companies.

On the same day, PwC shot off a letter to the MCA alleging divergence of funds in the ADAG companies in which PwC partner Vivek Prasad had also alleged that the ADAG had threatened legal action, impairing the ability of the auditor.

In an earlier letter dated April 24, PwC had stated that Reliance Capital had disputed the observations highlighted by it and did not convene an audit committee meeting within the expected time.

However, both the ADAG companies issued statements that they did “not agree with the reasons given by PWC” for its resignation.

According to a regulatory filing by Reliance Capital, “PwC's observations are completely baseless and unjustified. PwC has acted prematurely without even statutory discussions with the audit committee”.

Reliance Capital had also stated that its continuing auditor Pathak H D & Associates has been mandated by the audit committee to submit its independent report on PwC's observations within 15 days.

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