On September 13, the Enforcement Directorate (ED) slapped a Rs 230 crore penalty show cause notice on audit firm PricewaterhouseCoopers (PwC) India for violation of provisions of Foreign Exchange Management Act (FEMA). While PwC is yet to challenge the ED notice in the appellate tribunal, the firm along with its top executives have also received summons by Delhi Court and a Gurgaon Court in two separate defamation cases filed by Sarvesh Mathur, the firm’s former chief finance officer (CFO).
The ED’s probe on PwC pertains to the directions of the Supreme Court which asked it to look into the affairs of the company from the point of view of FEMA. In August 2017, the agency had also requested Mathur to provide information as he had earlier filed a complaint in February 2014 with ED, alleging PwC of indulging in financial irregularities.
PTI reported that the investigation revealed that PwC India had received $4,98,42,747 or equivalent to Rs 229 crore as purported grants from a Netherlands-based affiliate company Pricewaterhouse Coopers Services BV. “The adjudicating authority during the course of adjudication has held the company guilty of violation of section 10(6), 6(2), 6(3) and 9(b) of FEMA, 1999, for receiving investments in the guise of purported grants in non-permitted sector without the approval of the RBI,” stated the ED order.
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The penalty to the firm and its six executives including Chairman Shyamal Mukherjee, Director Satyavati Behera, Ex-Chairmen Deepak Kapoor and Ramesh Ranjan, former executive director Ambrish Dasgupta and former employee of the company Shivam Dubey, totals to Rs 230 crore.
Email queries to PwC in this regard remained unanswered.
Defamation Cases Against PwC
On October 9, a Gurgaon Magistrate Court issued summons against Deepak Kapoor, in the defamation case filed by Mathur in May 2017. And on September 30, a Delhi Court summoned Shyamal Mukherjee and the firm’s chief communications officer Nandini Chatterjee in another defamation case filed by Mathur in November 2017.
Both the courts have stated that the allegations made by the complainant ‘prima facie constitute an offence punishable under section 500 of the Indian Penal Code (IPC)’ committed by accused persons.
Mathur worked as the Chief Finance Officer of PwC India from March 2008 to December 2011. During his tenure and later, he had raised objections regarding falsification of accounts by the employees of PwC.
According to Mathur’s petition in the Gurgaon court, he was forced to resign and subsequently a fabricated termination letter was issued by the office bearers of PwC. The next hearing is scheduled on December 10.
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Before the Delhi court, Mathur has submitted two news articles published in the Economic Times on July 25, 2017, and in Outlook magazine in August 2017 which carried statements by PwC officials against Mathur. In its order, the court observed that the “allegations per se appear to be defamatory in nature which were duly published in the newspaper and the magazine whereby public has been made aware of the fact that the complainant is a disgruntled employee who has been repeatedly making baseless and slanderous allegations for several years against the company (PwC) and that complainant has retained and misused some proprietary information of the company. These imputations have the effect of lowering the professional and general reputations of a person like the complainant who is holding the post of CFO.” The next hearing is scheduled for mid-December.