Reliance Capital Board Denies All Violations In Letter To Ministry Of Company Affairs; Likely To Drag PwC To Court

The board of the Anil Ambani- owned Reliance Capital (RCap) has denied all violations raised by its erstwhile auditor PricewaterhouseCoopers (PwC) in a letter written to the Ministry of Company Affairs (MCA).

In a related development, there are indications that the company might even consider legal action against PwC after an independent investigation conducted by top law firms revealed there was no diversion of funds by the company.

In this connection, it may be recalled that diversion of funds was the primary allegation made by PwC against RCap.

A resignation letter by PwC had cast doubts over the appropriateness of certain transactions of the Anil Ambani group firms Reliance Capital and Reliance Home Finance.

Incidentally, the PwC resignation letter had also cited Section 143 (12) of Companies Act, which requires an auditing firm to report any matter to the relevant authorities if it had reason to believe that an offence or fraud is being committed.

In a recent filing to the stock exchanges, Reliance Capita’s board stated that it took note of the views of the other joint auditors, which confirmed that there are no violations as alleged by PwC under Section 143(12) of the Companies Act, 2013.

The alleged basis relied upon by PwC to report under Section 143(12) is itself grossly inadequate and does not even point to a single specific instance of alleged fraud, the company stated.

The board also alleged in its letter that PwC chose not to attend the audit committee meeting on June 12 despite being invited and resigned abruptly.

It also alleged the erstwhile auditor failed to share the letter, which it had written to the MCA, with the company or with its audit committee despite repeated requests.