SC notices in money-laundering case against Lilawati Hospital

Petitioner alleges trustees have siphoned off money, seeks appropriate investigation; court issues notices to corporate affairs ministry, ED, CBDT and SEBI

New Delhi: The Supreme Court today issued notices to the Centre and the Reserve Bank of India (RBI) on a petition seeking a probe into the alleged money laundering by trustees of Mumbai's Lilawati Hospital.

Judges B Sudershan Reddy and SS Nijjar also sought a response from the Ministry of Corporate Affairs, the Enforcement Directorate (ED), the Central Board of Direct Taxes (CBDT) and the Securities and Exchange Board of India (SEBI), on a plea seeking investigation by appropriate agencies into the alleged tax evasion and money laundering by the trustees of the hospital.

The petition filed by Delhi resident Harsh Raghuvanshi names the trustees as Prabodh Mehta, Rashmi Mehta, Chetan Mehta and Bhavin Mehta.

Senior advocate Ram Jethmalani appearing for the petitioner, submitted that the notice should be issued and all the respondents should be called to disclose facts which may have come to their knowledge and the steps taken by them against the trustees.

The bench tagged the petition along with that of a petition filed by Mr Jethmalani and others in which direction has been sought for bringing back black money stashed by Indians in banks abroad.

In the latest petition, it has been alleged that the Mehtas have siphoned off money from the hospital and through the hawala route this has been deposited in banks abroad, including Mauritius. It has also been alleged that money has been deposited in Liechtenstein Bank.


SEC slaps $17.5 million in fines on Satyam, PwC in fraud case

Satyam to pay $10 million for fraudulently overstating accounts; PwC to pay $7.5 million for deficient audits into the company’s statements enabling the fraud to go undetected

Washington/New Delhi: In a major development in the Satyam fraud case, US regulators on Tuesday fined the software firm and its auditors PricewaterhouseCoopers (PwC) India a combined $17.5 million for the accounts bungling that went undetected for several years.

The United States Securities Exchange Commission (US SEC) said Satyam Computer Services has agreed to pay a fine of $10 million towards settlement of charges of fraudulently "overstating the company's revenue, income and cash balances by more than $1 billion over five years".

Besides, the SEC has also asked PriceWaterhouse India (PW India), the former auditor of Satyam Computers, to pay $6 million in penalty for conducting "deficient audits of the company's financial statements and enabling a massive accounting fraud to go undetected for several years".

Also, the statement said, Lovelock & Lewes and Price Waterhouse Bangalore have agreed to pay the Public Company Accounting Oversight Board (PCAOB) a $1.5 million penalty for their violations of PCAOB rules and standards in relation to the Satyam audit engagement, PTI reports.  

"PW India violated its most fundamental duty as a public watchdog by failing to comply with some of the most elementary auditing standards and procedures in conducting the Satyam audits. The result of this failure was very harmful to Satyam shareholders, employees and vendors," said Robert Khuzami, director of SEC's Division of Enforcement.

While Satyam could not be contacted for comment, Deepak Kapoor, chairman of the PwC network of firms in India, said, "Our settlements with the SEC and PCAOB are positive steps and important milestones for PW India. The confession of fraud at Satyam by its chairman was a shock to the Indian business community and to all concerned."

Besides, the SEC statement said, PW India affiliates agreed to refrain from accepting any new US-based clients for six months, establish training programmes for its officers and employees on securities laws and accounting principles; institute new pre-opinion review controls; revise its audit policies and procedures; and appoint an independent monitor to ensure these measures are implemented.

Cheryl Scarboro, chief of the SEC's Foreign Corrupt Practices Act Unit, said: "PW India failed to conduct even the most fundamental audit procedures.
Audit firms worldwide must take seriously their critical gate-keeping duties whenever they perform audit engagements for SEC-registered issuers and their affiliates, and conduct proper audits that exercise professional skepticism and care."

The SEC's order instituting administrative proceedings against the firms finds that PW India staff failed to conduct procedures to confirm Satyam's cash and cash equivalent balances or its accounts receivables, it said.

Specifically, the order finds that PW India's "failure to properly execute third-party confirmation procedures resulted in the fraud at Satyam going undetected" for years.

The SEC statement said that PW India's failures in auditing Satyam "were indicative of a quality control failure throughout PW India" because PW India staff "routinely relinquished control of the delivery and receipt of cash confirmations entirely to their audit clients and rarely, if ever, questioned the integrity of the confirmation responses they received from the client by following up with the banks".

In January 2008, Satyam Computer founder B Ramalinga Raju had admitted to committing an accounting fraud (of about Rs7,000 crore) spread over a period of five years.

SEC had filed a complaint in the US District Court alleging that former senior officials at Satyam used false invoices and forged bank statements to inflate the company's cash balances and make it appear far more profitable to investors.

Satyam's American depository shares traded on the New York Stock Exchange. After the fraud came to light, Satyam was taken over by the government and was later acquired by Mahindras. 


Two more DGCA officials arrested in fake pilot licences scam

With these arrests, a total 13 people have been arrested so far

New Delhi: Two officials of the Directorate General of Civil Aviation (DGCA) have been arrested by the Delhi police on charges of helping pilots procure commercial pilot licences.

Ashok Chand, deputy commissioner of police (crime), told PTI that the two officials, MJ Bhattacharya and Mohammed K Ansari, were arrested by the Crime Branch yesterday. They are charged with helping pilots Hiren Nagar and Abhishek Kaushik procure commercial pilot licences.
With these arrests, a total of 13 people-some of them pilots-have been arrested in connection with the fake pilot licences case so far. Mr Nagar and Eknath Patil, described as a tout, were arrested by a Delhi police team in Ahmedabad on Monday. Mr Kaushik had allegedly obtained a licence by submitting forged marksheets to the DGCA.

"One has to clear three subjects-aviation meteorology, radio aids and instruments and air navigation-to secure an air transport pilot licences, which is mandatory for becoming a commander of an aircraft. However, these pilots failed in one or the other paper," Mr Chand said. During investigations, it had been revealed that Mr Kaushik got acquainted with Mr Nagar at a Flying School in Madhya Pradesh where they learned flying.

The DGCA is said to be in the process of scrutinising the licences of up to 4,000 pilots, following the discovery of the fake licences scam.



sudhir vahal

6 years ago

I am a father of 22 yr old boy who obtined commerical pilot licences on merrit and who is with out job for two years , no wonder that when such means are employed to get licence young people sitting out side with valid licence may get some ray of hope.

good we have woken up.

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