The forensic audit of CG Power and Industrial Solutions makes no mention of wrongful diversions, siphoning of funds or account manipulation by Gautam Thapar, the company’s founder and erstwhile chairman. It has, however, found that various banks, auditors and the company’s board were aware of the transactions, which are now being investigated for alleged fraud and manipulation.
The audit report by MSA Probe Consulting, appointed on the directions of SEBI to look into allegations against Thapar and CG Power, raised red flags over the conduct of the then auditor and the role of the banks in allowing the transactions.
Based on the findings of the forensic report, Thapar is expected to challenge the SEBI order that accused him of fund siphoning, sources said.
Structure of transactions
The audit report, a copy of which is with
“It can be concluded that there is a very high chance that CG Power was facing a threat of freeze in its credit facilities if there was a default by Avantha Group entities,” MSA Probe observed. “Thus, to save its own credit limits from being frozen, the RAC (research and advisory committee) and board of CG Power not only regularised the already given loan of ₹530 crore to Avantha Group entities but also gave approval for additional lending of up to ₹1,000 crore.”
It found that it was Aditya Birla Financial Ltd that proposed a specific structure for the loan, which CG Power adhered to.
The auditor has recommended a detailed investigation against the erstwhile auditors. KK Mankeshwar & Co, for selective disclosures in the audit against Thapar and others. The role of IndusInd Bank in a loan transaction with CG Power has also been questioned over ‘unusual disbursal’.
CG Power declined to comment as the matter is sub-judice.
Last year, SEBI had said Thapar and others had perpetrated a fraud on public investors after the company disclosed major governance and financial lapses.