Srei Equipment Finance auditor reports fraudulent transactions worth ₹2,133.74 cr. during FY18-21

Srei Equipment Finance on Thursday said its transactions auditor, BDO India LLP, has found fraudulent transactions worth ₹2,133.74 crore under the erstwhile management during FY18 to FY21.

The three entities reportedly involved in the fraudulent transactions are Shristi Group (causing a monetary impact of ₹1,415.22 crore, Samsara Energy Ltd. (₹284.71 crore) and Viom Infra Ventures, earlier Quippo Infrastructure Ltd., (₹433.81 crore).

Insolvency bound Srei Equipment Finance Ltd., along with its promoter Srei Infrastructure Finance, are being run by an administrator, which is looking into the day-to-today affairs of the companies since October 2021.

Following this, the administrator appointed under the Insolvency and Bankruptcy Code, 2016 engaged BDO India LLP (BDO or transaction auditor) to investigate the affairs of the company related to transactions under certain sections of the Code.

“Accordingly, the administrator of the company received a report from the professional agency appointed as the transaction auditor, indicating that there are certain transactions which are fraudulent in nature,” Srei Infrastructure Finance (SIFL) said in three separate regulatory filings.

The subsidiary Srei Equipment Finance (SEFL) is not a listed company.

In one of the cases, the BDO India report said monetary impact of ₹1,412.87 crore has been caused by loan disbursals to Shristi Group of entities under the erstwhile management, which is subject to adjudication of the NCLT.

The total impact of the transaction (excluding interest payment calculations) amounts to approximately ₹1,415.22 crore, as per the report by the transaction auditor.

The time of occurrence of all these fraudulent transactions is during 2017-18 to 2020-21.

Basis the report of the transaction auditor, the administrator of SEFL has “filed an application in respect of disbursements made to the Shristi Group of entities before the Kolkata bench of the National Company Law Tribunal (NCLT)... on June 10, 2022 against the Kanoria Foundation, Hari Prasad Kanoria, Hemant Kanoria, Sunil Kanoria, Sujit Kanoria,” the filing said.

Shristi Infrastructure Development Corporation, Bengal Shristi Infrastructure Development, Suasth Health Care (India) Pvt. Ltd., Avarsekar Realty, Sarga Hotel, and Adishakti Commercial are among the others named in the application.

The application to the NCLT in the matter of Shristi Group had been filed before the NCLT on July 26, 2022.

The other case relates to Viom Infra Ventures to whom the erstwhile promoters made loan disbursements during 2017-18 to 2020-21, causing a total monetary impact of the transaction (excluding interest payment calculations) of about ₹433.81 crore.

The application relating to disbursements to this company before the NCLT names the Kanoria brothers Hemant and Sunil and the customer – Viom Infra Ventures. The application has been filed before the NCLT on July 24, 2022, the filing said.

In the third case, a monetary impact of ₹284.71 crore is reported by the transaction auditor pertaining to fraudulent loan disbursements to Samsara Energy during FY18 to FY21. The administrator has filed an application against Heman Kanoria, Sunil Kanoria and Samsara Energy. This relates to July 24, 2022.