PMC Bank Fraud: EOW Arrests Auditors Jayesh Sanghani and Ketan Lakdawala
Moneylife Digital Team 12 November 2019
The economic offences wing (EOW) of Mumbai police has arrested Jayesh Sanghani and Ketan Lakdawala, the two auditors who did the statutory audit of fraud-hit Punjab and Maharashtra Cooperative Bank (PMC Bank). 
 
In a statement, the police says, "Jayesh Dhirajlal Sanghani and Ketan Pravinchand Lakdawala were called for investigation… during the course of investigation, their association with Housing Development Infrastructure Ltd (HDIL) came into light and both could not provide convincing explanation regarding their role as statutory auditors of PMC Bank. Hence both were arrested for further investigation..."
 
Jayesh Sanghani is partner in Ashok Jayesh & Associates, while Ketan Lakdawala is partner in Lakdawala & Co. 
 
As per PMC Bank's annual report for FY18-19, the lender had used services of three auditors, Lakdawala & Co, Ashok Jayesh & Associates and DB Ketkar & Co since FY10-11. Lakdawala & Co had conducted the statutory audit of PMC Bank for FY17-18 and FY18-19, while Ashok Jayesh & Associates did it for three years FY10-11, FY14-15 and FY16-17 and DB Ketkar & Co for FY11-12 and FY12-13.
 
Interestingly, Joy Thomas, the former managing director (MD) of PMC Bank had tried to exonerate the statutory auditors in his confession letter. "Since the bank was growing, the statutory auditors, due to their time constraints, were checking only the incremental advances and not the entire operations in all the accounts. They validated the incremental loans and advances and scrutinised the accounts, which were shown by us," he had said. 
 
On 2 October 2019, the Institute of Chartered Accountants of India (ICAI) issued a press release claiming to have initiated disciplinary action against Lakdawala & Co. Moneylife was told by Mumbai-based chartered accountants (CA) active in professional CA bodies that they had not come across the firm in their interactions.
 
Brajesh Mishra of Zee News, however, tracked down the firm's office address, only to find it locked and located in a housing society in Borivali with no board or nameplate to indicate its existence.
 
As Moneylife had pointed out, Lakdawala & Co and its CA partner KP Lakdawala (Membership No.035633) have their fingers in many more dangerously sticky deals which need a full investigation. 
 
Mumbai-based Ashok Jayesh & Associates claims to be carrying out statutory audit of branches of nationalised banks as well as cooperative banks. It claims that it was "engaged as a Concurrent Auditor of a co-operative bank for about 10 years." 
 
Ashok Jayesh & Associates has its head office in HDIL Towers at Bandra in Mumbai. However, except for an email ID of Ashok Jayesh, there is no mention of any team member of the firm on its website. 
 
On Monday, Sanjay Barve, commissioner of Mumbai police, had told PMC Bank depositors that they are probing the auditors and directors of the Bank and would take necessary action. 
 
The EOW is probing the Rs4,355 crore fraud committed by PMC Bank officials, directors and promoters of HDIL and its group companies. 
 
So far, the EOW (economic offences wing) had arrested five persons, including promoters of HDIL and Bank's top management.
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