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Deloitte ban to disrupt businesses and investment inflows: US to India

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Deloitte ban to disrupt businesses and investment inflows: US to India

MNCs, foreign investors invest on the Big Four’s advice, it says

The United States has told India that any move to ban Deloitte and other big auditing firms would disrupt businesses and investment inflows into the country.

This was disclosed to Deloitte global CEO Punit Renjen by US ambassador Kenneth Juster last week, sources said.

The US government has also conveyed to India that multi-national corporations and foreign investors make their decision to invest globally on the advice and guidance from the Big Four networks, which also provide consultancy services, according to sources.

It has said the government, or the regulator, could impose a penalty on Deloitte, but a ban would not have any rationale, particularly when the case is sub-judice.

During talks with New Delhi, Washington cited the example of KPMG which recently agreed to pay $50 million over altered audits in the US.

Renjen comes to India once in two years to meet his family in Haryana’s Rohtak. He met the ambassador and officials in his “spare” time, sources said, adding that he did not go to the ministries — North Block or Shashtri Bhawan — to meet the officials, but met them “somewhere else”. He left India on Monday to take part in a meeting in Singapore. When contacted, Deloitte spokesperson said, “Punit makes frequent personal trips to India. However, as a policy, we don’t comment on the specific travel plans of our executive leadership.”

A query sent to the US embassy remained unanswered.

MCA has sought a ban on Deloitte Haskins & Sells and BSR and Co, a part of KPMG, for their alleged role in not disclosing full facts on IL&FS, which defaulted on its payments last year.

The MCA had also instructed the serious fraud office to initiate disciplinary action against statutory auditors before the ICAI and the NFRA. It was asked to share the investigation report with the current management of IL&FS for initiating action under various provisions of Companies Act.

Invoking Section 140 (5) of the Company Act in the case would allow debarring an audit firm for at least five years.

The moves comes after the SFIO filed a complaint against 30 people, including these two audit firms, for concealing information by not flagging the alleged criminal conspiracy and misreported the financial statements of IL&FS firms.

The companies Big Four firms, including PwC and EY, audit, have up to 65 per cent of the total market cap of listed firms.

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