Draft of Query letter to Institute of Chartered accountants of India

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Inquiry on Auditors of GTB and auditor Hemant Kashiparekh of ahmedabad in relation to banking frauds in GTB Bank
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From:
Pankaj S Mody
2nd Floor , Janmangal Apartment
40 BMM Society , Paldi ,
Ahmedabad 380 006
Email id : psmody@yahoo.com

September 6,2004

To

The President of
Institute of Chartered Accountants of India
New Delhi

Subject: Auditors of Global Trust Bank

1. This is in reference to GTB closing down on account of grave liquidity problems. I understand that the Institute of Chartered accountants is looking into the audit done by the auditors at the instance of RBI . I would appreciate you grill the auditors of GTB in view of my links in para 2.
2. I am enclosing letter addressed to the vigilance department of GTB on 24-7-1999 and copy of same is enclosed in form of a link as under:-
a. http://www.gtbcore.blogspot.com

3. The various letters addressed to GTB at different times can be accessed by clicking various dates on the archives to the above weblog.
4. In this connection , I am annexing letter addressed to the auditor of Rupmanglam Investment Private Ltd and Flovin Plastics Private Ltd on 29-7-1999. The name of the auditor is Mr. Hemant Kashiparekh heading Kashiparekh and Associates. He did not reply the letter because of his guilty conscience.
5. Pursuant to the above letter I had written to the Institute of Chartered Accountants of India , Delhi on 20-9-1999 and the copy marked to several committee members of the Instittute. The letter did not get noticed by the Institiute for the reasons unknown to me. This letter was written keeping in view the banking fraud involving Global Trust Bank.
6. Unfortunately, my whistle-blowing a banking fraud, a criminal defamation case has been filed by Core Health Care who has swindled the financial institutions to the tune of Rs 750 crores and an article of this company was published by Indian Express on 7-12-2002 under the heading of Great Bank Robbery. In order to veil banking fraud , I was subjected to five day police remand where by I can be either silenced or my concurrence taken in the back dates so that the banking fraud does not get exposed. This police remand was done in connivance with tacit help of the auditor Mr. Hemant Kashiparekh along with the others.
7. Now that GTB bubble has burst, in national interest as well as interest of the public at large that the Institute of Chartered Accountants of India actively pursues the matter with the auditor Mr. H. Kashiparekh forthwith without extending any favour and mercy to him by subjecting him to gruelling test so as to teach lesson to him and also other chartered accountants in the country. It has become a fact that the Institute follows a very lax attitude and the Institute has lost its efficacy and purposely drags the issues for years so that person ultimately gives up fight.
8. In light of current developments in the country , I am drawing your attention with a view that you expose the auditor Mr. Kashiparekh , the management of Global Trust Bank and take measures to protect my interest in these companies as well as take criminal action on the auditor Mr. Hemant Kashiparekh for suppressing material facts as he and others made me pass through police remand and my family go through agony. This would ultimately serve as a lesson for other chartered accountants that they refrain from such tactics otherwise they would face stern action from the Institute.
9. At the same time , you through your auditors take firm action on the GTB management and compel them to divulge all truth in the matter failing which you take initiative to expose the auditor and GTB management publicly so that the image of the Institute of Chartered Accountants which has been tarnished gets restored and the people of India perceive that they can rely on Institute of Chartered Accountants.
10. I look forward to the official detailed findings of the Institute without offering any excuses for avoiding responsibility and mark a copy to media so that they can also know how effective you are in immediate follow-up action. It is needless to state that you will not blindly accept evasive reply of Mr. Kashiparekh but you shall ask him to adduce all documentary evidences in support of Mr. Jalundhwala in case he firmly believes that Mr Jatin Jalundhwala has all necessary authority and control to create charge on the immoveable property for Rs 12.5 crores on behalf of Rupmanglam and Flovin while he is compelled to furnish detailed reply to my letter addressed to him on 6-8-2002. His fax number is already appearing on the letter addressed to him.
11. Kindly look into the conduct of Mr. Saurabh Soparkar a chartered accountant (in the past) and at present High court advocate practicing in Gujarat High court . The necessary link is furnished herewith
http://www.barcoun.blogspot.com
I hope that the institute starts exposing scoundrel like mr. Saurabh Soparkar such so that the banks and the financial institutions do not get looted by his crooked means of protecting great bank robbers in the high court. I hope that the institute stops him delivering seminars in the institute till he gives satisfactory explanation. Coward and timid Mr. Soparkar has not been able to furnish any reply from Mr. Jatin Jalundhwala in form of written affidavit. i hope that he is also put to gruelling test so that such persons are punished heavily as he has failed in his duty to expose banking fraud in relation to GTB earlier.

12. I sincerely hope that the Institute maintain transparent and compassionate approach to the citizens of the country and not take a typical bureaucratic stand. The present letter is being marked to media so that they can also watch your performance too. I shall be passing on the information to various Member of Parliaments so that they can look into the conduct of Mr. Hemant Kashiparekh and Mr. Saurabh Soparkar in relation to GTB.

Thanking you.
Yours sincerely,

Pankaj S Mody

Annexures: Letter addressed to Hemant Kashiparekh on 29-7-99.
Letter addressed to the Institute of CHARTERED
ACCOUNTANTS OF INDIA ON 20-9-1999.




ANNEXURE A:Letter to Mr. H. Kashiparekh on 29-7-1999

PANKAJ S MODY

DIRECTOR AND SHAREHOLDER OF RUPMANGLAM INVESTMENT PVT LTD

JULY 29,1999



BY SPEED POST AD

PRIVATE AND CONFIDENTIAL


KASHIPAREKH AND ASSOCIATES,
AKSHAY APARTMENTS
Old High Court Lane
AHMEDABAD 380 009
Phone –079-26586770, fax 079- 26585770


Sir,


I am shareholder and director of Rupmanglam Investment Pvt Ltd.

Your firm is auditor of Rupmanglam Investment Pvt Ltd.

I would like to draw your attention that Mr. Jatin Jalundhwala jas registered charge on immoveable property of Rupmanglam Investment Pvt Ltd in favour of Global Trust Bank for granting term loan of Rs 12.5 crore loan to Core Health care ltd , a loss making company without having necessary authority and power of the Board of Directors as well as members of the company violating various provisions of company law.

It would not be out of place to mention that DhanyushyaFinancial Pvt Ltd through their advocate Shri Ashok D Shah had served the notice to me dated 12-12-1998 , whereby, I am accepted, confirmed and acknowledged as director of Rupmanglam Investment Pvt Ltd . Besides, Dhanyuhsya Financial Private Ltd has not put forth any claim that Mr. Jatin Jalundhwala is the legal director of Rupmangalm Investment Private Ltd.

In the reply given by my advocate , Shri Killol V Shelat dated 1-2-1999 to Dhanyushya ‘s advocate Shri Ashok D Shah , Dhanyushya Financial Pvt Ltd has not dared to submit reply even though more than half a year has elapsed and has also not refuted to the claim of Shri Pankaj S Mody as director of Rupmanglam Investment Pvt Ltd.

Moreover, Dhanyushya Fiancial Pvt Ltd has not cared to produce necessary evidence called for by me.-e.g. I had called for companya auditor’s report in relation to transfer of shares, if any and whether it is in accordance with the provisions of the company law pertaining to articles of association and memorandum of Rupmanglam Investment Private Ltd and as per the guide lines of Institute of Chartered accountants of India, New Delhi.

For your information, balance sheet pertaining to period 96-97 of Dhanyushya Financial Pvt Ltd does not show acquisition of Rupmanglam Investment Pvt Ltd shares belonging to mody family.

Inspite of Mr. Jati Jalundhwala being aware at the time of Shri Killol V Shelat’s letter dated 1-2-1999 that he was not in a postion tofurnish evidence of ownership of shares owned by Dhanyushya Financial Pvt Ltd , he goes ahead with mortgaging of Rupmanglam Investment Private Ltd which clearly show misrepresentation , concealment and suppression of material facts as well as show his malafide intentions.Mr. Jatin Jalundhwala is instrumental in putting shareholders of Rupmanglam Investment Private Ltd at irretrievable loss violating provisions of company law.

You being the auditor of the company owe responsibility to the members of the company, and initiate necessary action when company assets are being stripped and siphoned to such large extent.

As per Institute guidelines as per company law provisions you are to conduct detailed inquiry immediately in professional manner keeping in view the interest of shareholders of Rupmanglam Investment Private Ltd.

As a auditor of the company, you are to procure detailed evidence (by verifying minute books) , resolutions, notice for transfer of shares , compliance of articles 10 to 17 of articles of association and memorandum) from Mr. Jatin Jalundhwala , who is posing as director of the company and having necessary power of the board of directors and members of Rupmanglam Investment Private Ltd to mortgage property of Rupmanglam Investment Pvt Ltd.

As the amount of fraud involved is ver large, I hope that your firm shall take the matter seriously and report findings.

Thanking you.

Yours sincerely,

Pankaj S Mody

(DIRECTOR and SHAREHOLDER OF
RUPMANGLAM INVESTMENT PVT LTD)


Annexure B: Letter dated 20-9-1999 to the Institute of Chartered Accountants of India

PANKAJ S MODY
CORRESPONDENCE ADDRESS
FLAT NO 4 , 2ND FLOOR
JANMANGAL FLAT
BRAHMAN MITRA MANDAL SOC
JALARAM MANDIR ROAD
AHMEDABAD 380 006

DATED : 20TH September 1999



THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
P B NO 7100, INDRAPRASTHA MARG
NEW DELHI 110 002



DEAR SIR,


KIND ATTENTION: THE DISCIPLINARY COMMITTEE

REFERENCE: MY LETTER DATED 5TH MAY 1999 IN RESPONSE TO YOUR LETTER 26-CA(43/W) 98 DATED 2ND NOVEMBER 1998


Please refer to my complaint letter dated 15th May 1998 to Shri Hemant Kashiparekh and my subsequent letter dated 5th May 1999 to the Institute of Chartered Accountants of India New Delhi.
Even, after a lapse of four months in a serious matter such as income tax, I have not received any reply from the Institute, when the whole is moving in jet age and computer age. Such a careless attitude, on the part of the Institute of Chartered Accountants is deprecating.
Over and above , my complaint to Mr. Hemant Kashiparekh, I have an additional serious complaint against Kashiparekh and Associates (Headed by Shri Hemant Kashiparekh ), which covers detection of fraud which I came to know recently and they are turning a blind eye to the fraud.
PROFESSIONAL DUTIES AND RESPONSIBILITIES:-

a) Kashiparekh and Associates are auditors of Rupmanglam Investment Private Ltd (hence forth referred as RIPL), where I am a shareholder and a director, I am enclosing Xerox copy of balance sheet of RIPL for the year ended on 31-3-1994 depicting signature of Kashiparekh and Associates and my signature as director.
b) I have already signed audited balance sheets pertaining to period subsequent to March 31st 1994 and I need to have Xerox copy of balance sheets subsequent to March 31/3/94 –i.e. for the period ending 31/3/1995 , 31/3/96 , 31/3/97, 31/3/98 , 31/3/99 and in his reply dated August 27 1998, , he has made tacit confession that kashiparekh and Associates are still auditors of RIPL. This is because , he has specifically not denied the facts.
c) Shri Kashiparekh has suggested in his letter in August 1998 that I need to approach the Board of Directors of RIPL for information on RIPL which he is supposed to have (since he is aware that other directors are not going to extend cooperation and that would meet the needs of reply to the Institute and thereby escape the exposure to the Institute). There is no justification for him on his part, not to part information of the company such as balance sheet of the company, valuation of shares as long as I am shareholder and director of the company.
d) It is obligatory on the part of Kashiparekh and Associates and all concerned CA’s of Kashiparekh and Associates to furnish Xerox copy of balance sheets till it is proved contrary by Kahiparekh And Associates , that I am neither a director nor a shareholder by verifying the minute book records o the company as it is my right as director and shareholder of RIPL to ask for Balance sheet of the company.
BRIEF DESCRIPTION OF FRAUD:
v Only sometime back , I learnt that one Mr. Jatin Jalundhwala posing as director of RIPL has fraudulently mortgaged propery of RIPL and has obtained Rs 12.5 crores for successive loss making and highly indebted public ltd company (incidently , Mr. Jatin Jalundhwala is company secretary of this public limited company) without having authority of board of directors and shareholders of RIPL . The mortgage of property has taken subsequent to my letter to Mr. Hemant Kashiparekh and there is reason to believe that Mr. Hemant Kashiparekh has parted the information complaint against him to others which led to mortgaging of the propery and thereby stripping the assets of the company.
v Further , in my letter addressed by my advocate Shri Killol V Shelat dated 1-2-1999 to Dhanyushya Financial Pvt Ltd (where Mr. Jatin Jalundhwala is director ), my advocate Shri Killol v shelat has called for auditor certificate for ownership of shares by statutory records such as minute book in particular of RIPL.
v You will find it very interesting to know that Dhanyushya Financial Pvt Ltd has not cared to comply with the terms of notice quoted above for over six months for the reasons best known to them. I have already written a complaint letter to vigilance department of the concerned bank in the recent past and I understand that the bank has also started serious probe in the matter and I understand that startling results will come out in near future in which big heads will have to face the music for the legal acts and omissions deliberately done by them to extract huge loan of Rs 12.5 crores by pledging the property of the company not belonging to the mortgagor.
ROLE OF AUDITOR IN CASE OF DETECTION OF FRAUD:-
v Kashiparekh and Associates being the auditor and WATCH DOG of the company anf its shareholders i.e. RIPL , he needs to substantiate by inspecting the various records such as minute book of meeting of directors and shareholders – so as to how power and authority as been acquired by Mr. Jatin Jalundhwala to mortgage the property.
v The auditor is bound to provide complete evidence and cannot give any excuse not to supply complete evidence and cannot give any excuse not to furnish particulars to me , information as director and shareholder of the company. Any attempt by Kashiparekh and Associates, not to provide information and convey that, I should approach Board of Directors means that , he wants to evade duties and to shrug off the responsibility cast on him by the statute and create hindrance and thereby he tries to connive with the wrong –doers.
v Kashiparekh and Associates as well as Mr. Hemant Kashiparekh need to be advised that he should refrain from playing foul behind my back (taking other directors of the company who have abruptly turned uncooperative on account of undue pressure by Shri Hemant Kashiparekh ) to suit to his whims and his requirements. He is legally appointed auditor of the company and not the owner of the company and he is bound by his professional duties and responsibilities failing which, the Institute of Chartered Accoutants of India shall be duty bound to take appropriate action against Kashiparekh and associates, otherewise, the image of the Institute of Chartered Accountants of India may get tarnished.
v In view of the above mentioned facts and circumstances, it is requested that Institute intervenes and exercises your good offices and direct Shri Hemant Kashiparekh to disclose and intimate to me complete information called by me with full supporting evidence so as to the circumstances in which Mr. Jatin Jalundhwala has acquired power to mortgage the property belonging to some one else. It will not be too much, if I ask your institut to bring to the notice of Shri Hemant Kashiparekh who is member of 7our association that failure to comply with the above mentioned particulars and as well as earlier request to supply copies of certain documents and information will result in such legal actions against Shri Hemant Kashiparekh at their cost and consequences .
v Mr. Hemant Kashiparekh needs to realise that he is not the owner of the company but he is the chartered accountant appointed by the company with the hope of straightforward and transparent approach towards the directors vis –a vis the interest of the company.

Looking to the seriousness and urgency of the problem, it is imperative to call for above information from Kashiparekh and Associates immediately so that I can prevent the asset of the company being stripped.
Please acknowledge receipt of this letter and take prompt follow-up action in the matter.



Yours truly,


Pankaj S Mody



Enclosure:- Extract of balance sheet of RIPL for the ending on 31-31-94 bearing signature. as director.

Address of auditor Kashiparekh and Associates,

Akhshay apartment , Old High court lane
Ahmedabad 380 009
Phone –079-26586770, fax 079- 26585770

Copy marked to S P Chajed , G Sitharaman, Amarjit Chopra, Ashok kumar Chandak

























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