Auditors appointed at Wadhawans’ behest: Economic Offences Wing of Mumbai Police

EOW officers suspect larger conspiracy, look for past connection with HDIL

In custody: Ketan Lakdawala and Jayesh Sanghani leaving the Esplanade court in Mumbai on Tuesday.

The Economic Offences Wing (EOW) of the Mumbai Police on Tuesday said the two auditors of Punjab and Maharashtra Cooperative (PMC) Bank were appointed at the behest of Housing Development and Infrastructure Limited (HDIL) promoters Rakesh and Sarang Wadhawan, establishing a conflict of interest and a larger conspiracy.

Kept losses hidden

Jayesh Sanghani and Ketan Lakdawala were arrested on Monday evening in connection with the EOW’s investigation into the alleged fraud, where loans in large amounts were advanced to the HDIL group and the losses incurred due to the same were kept hidden. Both Mr. Sanghani and Mr. Lakdawala are from separate firms.

According to EOW officers, the two were appointed as independent auditors for the bank by Joy Thomas, ex-managing director, and Waryam Singh, ex-chairman, of the bank at the behest of the Wadhawans.

“The act in itself is a violation of several banking and finance rules. It also indicates that their appointment was part of a larger conspiracy by the Wadhawans and bank officials to keep the fraud hidden. Inquiries so far indicate that the duo constantly turned a blind eye to HDIL’s loans becoming non-performing assets and causing losses to the bank. Both of them were questioned at length about their failure to report the irregularities and were placed under arrest after being unable to provide a satisfactory explanation,” an EOW officer said.

The officer said there was also prima facie information, suggesting Mr. Sanghani and Mr. Lakdawala had dealings with the HDIL group in the past.

“We are currently going through financial records of HDIL and both the accused’s firms to find evidence to establish this. Inquiries are also being made with their colleagues and key HDIL officials, who would be in a position to know this,” an EOW officer said.

The officer said if proven, the past connection would strengthen the agency’s evidence about the larger conspiracy hatched between the Wadhawans and key functionaries of PMC Bank, including Mr. Singh and Mr. Thomas, all of whom have already been arrested.

Mr. Sanghani and Mr. Lakdawala are facing action from the Institute of Chartered Accountants of India, and the police are in touch with them to obtain any information pertinent to the investigation, an officer said.