The economic offences wing of the Delhi police has filed FIR against the online Travel major Yatra online for alleged irregularities in financial reporting.

Yet another story of corporate mis-governance has come to the fore. And yet again there is immense speculation & scrutiny entailed by the watchdog accounting firm as well as the management of the accused company. Day in & day out we are used to seeing large size advertisement by online travel companies that including Yatra online. In a FIR lodged by the economic offences wing of the Delhi police against the company at the behest of one Sunil Narain of Air Travel Bureau who happened to be the managing director of the erstwhile Air Travel Bureau. The on-line travel management company is finding itself in the cross hairs of a serous frauds investigation in as far as fudging & manipulating the accounting processes are concerned.

The case is on of forgery and criminal breach of trust against ‘Yatra Online Private Limited’ and its officials. In the FIR, the complainant has alleged that two separate balance sheets were prepared by the company, one for company affairs and other for shareholders.

What has now become known is that the accused company in order to deny the majority stake holders & promoter his legitimate monies on account of a 100% stake sale in Air travel bureau, the company resorted to undervalue the top line as well as appropriate payments & reserves to liability side thereby seriously jeopardizing the balance payment due to the owner. It is pertinent to mention that as per the FIR filed, the owner had received a part payment amounting to 50% of the total sale value arrived at, & the balance was to be paid by a stipulated time frame subject to certain conditionality being fulfilled. “The balance sheet and financial statements were changed without prior permission of (National Company Law Tribunal (NCLT). The accused is showing loss in short booking and foreign exchange just to avoid the balance payment as per SPA. They from the beginning had no intention to make the payment of balance consideration of Rs 200 crores,” the complainant accused in the FIR.

What’s happened thereafter is what is now known as corporate Malintending & fiscal manipulation to either show up the revenues & boost market consolidation or to undervalue & conceal the material information that saves the company a substantial amount by way of taxes & other liabilities. We have had recently cases involving Deloitte & it’s clients ILFS that has since gone kaput throwing the stock & financial markets into a disarray and also squandering enormous public wealth. Similarly we have reports about Jet airways in dock over some financial irregularities that even saw its founder promoter & his wife getting offloaded from an Emirates flight to Dubai last month.

‌Coming back to this particular case, the FIR further states that the buyer company Yatra online had entered into a stakes sales arrangement with Air Travel Bureau based in Connaught place in September 2017. According to a senior police official, the complainant, Sunil Narain, stated that Yatra Online Private Limited through Dhruv Shringi and Alok Vaish, Chief Financial Officer (CFO) of the company entered into Sale Purchase Agreement (SPA) with him in 2017. After signing the SPA, they told complainant that they wish to ascertain the actual financial condition of the company before making the balance payment. A CFO was appointed by them and ATB was handed over to them. However, Dhruv paid Rs 51 crore and rest of the payment was scheduled to be paid on the basis of balance sheet of the ATB for year ending in 2018, as per the valuation calculated in terms of the SPA and TOR. .

Under the terms of the share purchase agreement the buyer company had to pay all the monies by a specified date subject to 51 crores of the total consideration being paid at the time of signing of the deal & thereafter. The balance amount was tied to some performance reports of the amalgamated company which as per the complainant was a non-issue since the company had done exceptionally well till the arrangement was arrived at & there could be no reason why the expected results or desired performance criteria wouldn’t be met.

‌The FIR further elaborates on the devious design of the CEO/CFO along with other top level management in active connivance with the auditing firm SR Batliboi & co to deliberately conceal material information & to change & alter the facts & figures to escape scrutiny as well as deny the seller his legitimate due. However as per the spokesperson of Yatra, “the present issue at its core is a civil dispute between the shareholders of ATB and the same is in arbitration before an arbitrator appointed by the Delhi High Court even prior to the registration of the FIR, with the consent of both parties” While Yatra believes that the complaint has been filed for collateral purposes, we have already participated in the preliminary enquiry and intend to cooperate fully with the investigating agency. As this moves forward, Yatra will take appropriate action and put forth its position in accordance with legal advice,” the spokesperson added.

‌once again the role & responsibility of the auditing and accounting firms has come under serious scrutiny. Far from upholding their Hippocratic oath and obligation they not only resort to unfair and unethical practices in contravention to their professional duties but also stand responsible for bringing into disrepute the while profession. Paradoxically no less than the PM of this Country had exhorted the Chartered accountants in his first tenure and egged them on to perform their duties in the most responsible and legal manner.

‌These are distressing cases which have put a serious question mark on the real standings of a particular company that resorts to unfair accounting practices and policies. It is time that the government agencies woke to this new menace & ugly & unhealthy corporate culture that strikes at the very core of corporate governance.