Icai sets up panel to study systemic issues in IL&FS crisis

Chartered accountants' apex body Icai on Thursday said it has constituted a nine-member panel to study the systemic issues in the IL&FS crisis, amid the government intensifying efforts to address the problems at the diversified group.

The setting up of the committee by the Icai comes days after it sought explanation from audit firms that carried out statutory audit works at the IL&FS Group in the past few years.

The Institute of Chartered Accountants of India (Icai), which has more than 2.95 lakh members, has also written to the Reserve Bank of India and the Serious Fraud Investigation Office seeking details about IL&FS issue.

In a release issued on Thursday, Icai said it has set up a high power group that "would study the systemic issues in the IL&FS matter and suggest remedial measures and improvement in the system and any other matter incidental thereto".

The nine-member panel is headed by S B Zaware and has two past Icai presidents — Ved Jain and Nilesh Shivji Vikamsey—as members.

According to an official at the institute, Jain was the president of the institute during the time of Satyam Computer Services crisis in 2008 and that he has experience of handling such situations.

Like in the case of Infrastructure Leasing & Financial Services (IL&FS), the government had also superseded the board of erstwhile Satyam Computer, which was embroiled in one of the biggest accounting scams.

On Wednesday, the Icai said that based on the responses from the RBI and the SFIO, it would be fast-tracking its investigation on the role of member /firm of the institute allegedly involved in terms of the disciplinary mechanism.

On October 1, the government superseded the board of IL&FS and appointed a six-member board with Uday Kotak as the non-executive chairman.

In a significant development, the National Company Law Tribunal (NCLT) has allowed the new board of directors to "replace" directors at subsidiaries, joint ventures and associate companies of IL&FS.

As per the corporate affairs ministry, IL&FS Group has around 348 direct or indirect subsidiaries, associate companies and joint ventures. Further, the NCLT, in an order dated October 9, said that "actions of the newly-appointed directors done in the good faith, in the interest of the company, various stakeholders, including public at large, the same are protected".

Meanwhile, the newly constituted board of IL&FS, headed by veteran banker Uday Kotak, will meet for the second time Friday to decide on the further course of action plan for the cash-crunched company, a source said. In the maiden meeting held on October 4, the six-member board undertook an initial assessment of the ground reality of the company and discussed the way forward.

"In tomorrow's meeting, the board will now be looking into various issues, including fund raising plan, for the company," said one of the source. The firm needs an immediate capital infusion of Rs 3,000 crore and is also planning a Rs 4,500-crore rights issue.