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August 12, 2019

Reliance Capital board fires back at PwC

Following a board meeting on 8 August 2019, Reliance Capital released a statement to the National Stock Exchange of India saying that it noted the views of Pathak HD & Associates ‘who have been auditors of the company for the last three financial years and continue as the sole statutory Auditors of the Company, confirming that there are no violations as alleged by PWC’.

PwC had resigned as joint auditor on 11 June 2019, saying it had not received ‘satisfactory response to its queries’.

Reliance Capital’s board said it also noted that PWC had audited the accounts for the financial year 2017–2018, without any qualifications or raising any concerns and added that independent legal opinion had confirmed that ‘there was no violation attracting Section 143(12) of the Companies Act, and which concluded that the PWC letter is devoid of any rationale or basis and is invalid’.

Reliance Capital described ‘the alleged basis relied upon by PWC for reporting under Section 143(12) is itself grossly inadequate, and does not even point to a single specific instance of alleged fraud’.

The board also listed the following points:

  • “PWC had chosen not to attend the Audit Committee meeting on June 12, 2019 despite being invited to do so;
  • “PWC abruptly resigned at the unearthly hour of 4.32 am on June 11, 2019;
  • “After resigning and ceasing to be the auditor of the Company, PWC filed its letter with MCA later the same day; and
  • “PWC did not even share a copy of its letter with the Company or even with the Board’s independent Audit Committee, despite repeated requests by the Company.”

PWC has yet to respond. However, two other Reliance group companies have also just lost a joint auditor with KPMG-affiliate BSR & Associates resigning a statutory auditor to Reliance Infrastructure and Reliance Power citing the reasons included in the ‘basis for qualified opinion’ in the audit report for FY2018-2019. As with Reliance Capital, Pathak HD & Associates will continue as sole auditor to the two companies.

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