PwC 'under probe' in Religare fraud: EOW

The Delhi Police’s Economic Offences Wing (EOW) has told a local Court that UK-based top auditor PricewaterhouseCoopers (PwC) is “under probe” in a multi-crore loan fraud allegedly involving Malvinder and Shivinder Mohan Singh, the erstwhile promoters of Religare Enterprises.
In its recent supplementary charge sheet filed against 19 entities, including three individuals and 16 companies, the EOW told the Court that “if any incriminating evidence” comes on record against PwC, the agency will present the same before the Court via another supplementary charge sheet.

“…PwC is under probe as PwC was the statutory auditor of both REL and RFL (Religare Finvest Ltd) for the financial year 2011 to 2017... If any incriminating evidence comes on record, it will be filed through supplementary charge sheet,” according to the charge sheet filed recently by the EOW.

ET has reviewed a copy of the chargesheet.

When contacted, a spokesperson for Price Waterhouse told ET that “Delhi Police's EOW have not contacted us for any information. We will be duly cooperating with the agency in the investigation into Religare.”

It added that “PW and PwC are separate legal entities” as PwC does not perform audits.

The charge sheet also alleges that a co-accused in the case, Sunil Godhwani, the then chairman and managing director of REL, used his undue influence to take loan from Religare Finvest (the complainant in the case) and used a “circuitous route” to square off his personal liabilities.

“It has been revealed that Sunil Godhwani has repaid his personal liability of loan by diverting the amount from the complainant company - Religare Finvest Ltd...using his influence, the amount taken was shown as loan from the shell entity Fern Healthcare Pvt Ltd to conceal the real transaction and the money was rotated in circuitous manner so that nobody can detect the real source of money which has…originated from complainant company – RFL,” reads the charge sheet.

It adds “the jugglery of financial transactions was carried out in such a manner that money transferred from the company - RHC Holding Pvt Ltd into different entities came back to RHC Holding on the same day, thus squaring off the loan liability of Sunil Godhwani…”

EOW has relied upon a disclosure allegedly by co-accused NK Ghoushal, a stockbroker and alleged associate of the Singh brothers.

The agency has claimed that Ghoushal had revealed that the amount was rotated in the same manner in other instances under the instructions of Malvinder, Shivinder Singh and Sunil Godhwani.

Further, Ghoushal has also alleged that the funds of RFL were rotated from one entity to another to conceal the transactions.

The EOW has alleged that “the modus operandi was to obtain an amount in the form of unsecured loans in his companies and thereafter on the very same day the amount has been transferred to different entities which (was) eventually misappropriated and diverted for the benefit of promoters.”

ET was the first to report on Tuesday that Ghoushal, in his disclosure to EOW, had allegedly claimed that four of his companies used a “disbursement vehicle/facilitator to transfer the funds from one entity to another entity”.

The four companies are Decent Financial Services Pvt Ltd; Nishu Finlease Pvt Ltd; VSB Investments and Arch Finance Ltd.

These companies, according to the EOW, acted as conduits to actively help the promoters appropriate the money.

The agency is on the lookout for another co-accused, AC Mahajan, who is yet to be arrested.

ET was the first to report on Tuesday the EOW has in a fresh supplementary charge sheet charged 19 entities, including three individuals and 16 companies, in the Religare fraud.