Farouk Irani, former Managing Director of First Leasing Company of India (FLCI), responds to the report ‘First Leasing scouts for buyer’ on Page 15 of The Hindu dated March 12:
A public limited company’s financials are not solely authenticated by the Managing Director. As per the Companies Act, the balance sheet and related financials of a public limited company must also be endorsed by the CFO, the directors, and the Chairman and must be specifically approved by the company’s statutory auditors and the audit committee. In this case, the documentary trail will establish that this process was followed.
The CFO, L. Sivaramakrishnan, who drew up the company’s financials, directly handled all accounts and audits undertaken by the statutory auditors, internal auditors, RBI inspectors, rating agencies, and banks. The alleged financial irregularities committed by the CFO escaped the notice of at least 20 such inspections by financial experts.
On realising the enormity of this misrepresentation of accounts I personally met the RBI auditors and voluntarily disclosed the financial position of the company to them. In other words, I was the whistleblower. It must be noted that I did this in the company’s interest and not from any personal motive and also that in no way was I a beneficiary of the alleged misrepresentation of accounts. (I hold just 0.3 per cent of equity shares in the company and any audit of my personal accounts will evidence my financial integrity.) I approached the RBI auditors with a constructive plan by which FLCI could be rescued and its problems addressed. This revival plan was supported by realistic assumptions and detailed projected cash flows.
— Farouk Irani