The Enforcement Directorate is probing whether chartered accountants had colluded with promoters of Ponzi scheme companies that duped thousands of investors of their savings.
The Union Finance Ministry wrote a letter earlier this month to the Institute of Chartered Accountants of India in this regard.
The Chairman of the ICAI, Mr K Raghu, has responded to the ED missive. ED officials however declined to make any comments in this regard.
The Finance Ministry maintains that the auditors of most companies engaged in illegal money raising activities had failed in their duties to make mandatory disclosures and had made misleading statements. They had also failed to report on the unsecured loans given by these companies.
This is corroborated by many senior CA professionals who spoke to The Hindu on conditions of anonymity. “We have to admit that corporate fraud could be prevented had the ICAI used its powers to take action against erring members”, said the CEO of a multinational. Action has been taken in major cases like Satyam or Reebok but there are many smaller instances of frauds which have affected investors. A strong message could be given if ICAI was more proactive than reactive”, said another senior chartered accountant.
The ED letter to ICAI comes at a time when investigations are gathering steam. Even as several people have now been taken into custody for their involvement in the Saradha scam, the ED on Thursday swooped on 2,631 banks accounts of Rose Valley, whose illegal money raising activities was nearly treble that of Saradha by value and spanned across seven states in eastern, northern and western India.
