Srei’s auditor flags over 13k cr transactions as fraud – Times of India

MUMBAI: The auditor to Srei Equipment Finance has identified Rs 13,110-crore transactions as fraudulent. The disclosure was made in the financial results of Srei Infrastructure Finance filed with stock exchanges.
The two Kolkata-based finance companies are undergoing insolvency proceedings after the Reserve Bank of India (RBI) approached the tribunal to initiate the same. The companies are currently under the control of RBI-appointed administrator Rajnish Sharma, formerly chief general manager of Bank of Baroda.
In notes to accounts of Srei’s financial results for the quarter ended September 2022, the auditor said that it had appointed a professional agency to look at the transactions and the agency had flagged loans amounting to Rs 13,110 crore as fraudulent under section 66 of the Insolvency and Bankruptcy Code. Earlier, consultancy firm BDO was appointed to look into the transactions.

This is the third time auditors have flagged fraudulent transactions in the group. In June, the auditor had flagged Rs 3,025-crore transactions in Srei Equipment Finance as fraud followed by a second submission where Rs 2,134 crore were flagged.
A spokesperson for Hemant and Sunil Kanoria, the promoters of the Srei group, refuted the allegations and said that they arose from lack of competence and business understanding on the part of the BDO.
“Srei has been financing such transactions for the last 32 years and at no time have the regulator, bankers or auditors ever red-flagged any of these transactions or made such frivolous and incomprehensible categorisation,” the spokesperson said.
The spokesperson added that these were genuine loan transactions that were legitimate structured infrastructure finance options, and the claims have not been validated by the tribunal.
In a separate filing, Srei Infrastructure said that it has filed an FIR in Kolkata against its creditor Svayambhut Marketing, which has committed fraud by selling hypothecated/mortgaged security without the company’s consent. The amount involved was Rs 23 crore. Srei’s administrator has also filed a report with the RBI over the fraud.

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