Auditors of debt-laden IL&FS not only connived with the top management in their fraudulent activities, but also sought to sell them certain products and services, according to findings of the SFIO probe that show large-scale violations in their auditing activities.

The Serious Fraud Investigation Office (SFIO) probe into IL&FS group firm -- IL&FS Financial Services Ltd (IFIN) -- has revealed serious lapses at the level of auditors, auditing committee and the then top brass of the group.

While the government has appointed a new board at IL&FS as part of its efforts to revive the sprawling group, the SFIO has filed its first chargesheet after taking into consideration details about 400 entities and data collected from various sources, including computers and laptops, among other sources.

Citing the investigation report, officials said the engagement team and engagement partners of Deloitte, Haskins & Sells (which served as auditor earlier) were aware about the company’s modus operandi of funding defaulting borrowers when it comes to payment of interest and principal amount.

There was window-dressing of the asset book, ever-greening of loans and delayed recoveries for several years in connivance with the top brass.

According to the probe agency, an e-mail from June 2017 revealed that an auditor had been offering a product of Deloitte Touche Tohmastu India LLP, the consulting arm of Deloitte group, to IL&FS.

Despite an end-use policy being in place, the investigation found that loans were not monitored for their proper end-use.

The SFIO has recommended necessary action against the guilty auditors and also a detailed internal investigation by the RBI to identify reasons for the delay in detecting the lapses.

In its first chargesheet, the SFIO has identified a nine-member coterie behind the huge financial fraud at IFIN, which it alleged connived with the statutory auditors and some independent directors to defraud the company while running it as a personal fiefdom.