Corporate lobbyist Niira Radia and her companies have been found guilty of a massive accounting fraud by the Serious Frauds division of the Corporate Affairs Ministry, which is in the process of launching prosecution against them.
In a fresh revelation made to the Supreme Court, the Serious Frauds Investigation Office (SFIO), probing the company affairs of Radia’s flagship company Vaishnavi Corporate Communications limited and eight other companies, informed the court that the companies’ balance sheets violated provisions of the Companies Act 1956.
Some of the violations committed by the Radia firms were highlighted to be serious in nature by the SFIO for which the Ministry of Corporate Affairs (MCA) has already granted sanction for prosecution. These irregularities related to non-disclosure of investments, foreign exchange earnings, related party transactions, which is an offence under Section 211 of the Act.
Besides Vaishnavi, some of the group companies — Vaishnavi Advisory Services, Claro Consultancy, Vitcom Consulting and Neucom Consulting — failed to show rent as “support services” in their balance sheets and in certain cases, even the balance sheets — including “profit and loss account” — was not signed by the Managing Director of the firms, attracting action under Section 215 of the Companies Act.
With regard to the remaining firms — leisure Club India Pvt ltd, Magic Airlines, Crownmart International, and Maansi Agro, the SFIO detected several procedural lapses besides non-discharge of professional duties by the statutory auditor.
The affidavit was filed in response to an application moved by NGO CPIl demanding extensive probe into the content of Radia tapes. The SFIO informed court that the investigation into the charges was completed in January this year and a report of investigation has been handed over to MCA and Income Tax Department by January 22 for further probe.
In addition, a formal complaint will be lodged with ICAI to initiate action against the statutory auditors who prepared the defective balance sheets and also the company secretaries who took part in the professional misconduct. The MCA has also sought the opinion of law Ministry to further invoke new provisions of Company Act as non-disclosure of rent as professional fee in the company’s balance sheets rendered the financial statements to be “false” was a serious offence.
Broadening the ambit of probe, the SFIO will ask Registrar of Companies, Mumbai to probe into the deals related to acquisition of News X and Eenadu channels, besides the deal sealed between Tata Realty and Unitech limited, after conversations contained in the Radia tapes gave indications of major discrepancies in the ensuing agreements.