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CG Power uncovers financial irregularities, unauthorised deals by employees

CG Power uncovers financial irregularities, unauthorised deals by employees

CG Power uncovers financial irregularities, unauthorised deals by employees
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By CNBC-TV18 Aug 20, 2019 9:56:46 AM IST (Updated)

CG Power said the irregularities were “purportedly carried out by identified company personnel (both current and past) including certain non-executive directors, certain KMPs and others identified employees” in breach of rules and without proper authorization.

An internal probe has uncovered several irregularities in the financial statements of CG Power and Industrial Solutions, including understating total liabilities and advances and unauthorized transactions, according to an internal probe conducted by the board of directors.

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An independent legal firm appointed by the board of directors to probe certain financial wrongdoings by certain employees of the company has submitted a report to the board, pointing out certain misrepresentation in financial statements of the company and unauthorized financial transactions.
The irregularities were “purportedly carried out by identified company personnel (both current and past) including certain non-executive directors, certain KMPs and others identified employees” in breach of rules and without proper authorization, noted the report.
The board of CG Power decided to conduct a forensic investigation into several financial wrongdoing and irregularities. The board said the company will take requisite legal actions.
Here are the key highlights of the report filed by the company to the stock exchanges:
1)
The total liabilities of the company and the group may have been potentially understated by approximately Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as at March 31, 2018; and by Rs 601.83 crore and Rs 401.83 crore, respectively as at April 1, 2017.
2) Advances to related and unrelated parties of the company and the group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively, as at March 31, 2018; and by Rs 1,479.34 crore and Rs 1,331.47 crore, respectively as at April 1, 2017.
3) Certain assets of the company that were purportedly provided as collateral without due authority; and the Company was made a co-borrower and/or guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation. The moneys so obtained were immediately and without due authorisation routed out of the Company, either by itself or from its subsidiaries or ostensibly unrelated parties to certain related parties.
4) The net worth of the company was potentially understated due to unauthorised and inappropriate write-offs and charges debited to the Profit and Loss statement of the company during the year ended March 31, 2018, and April 1, 2017.
5) These were purportedly carried out by identified company personnel (both current and past) including certain non-executive directors, certain KMPs and others identified employees ("CIP") in breach of the Rules of Procedure of the Company ("ROP"), and/or without proper information to or authorization.
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