Days after the arrest of MMTC (Metals and Minerals Trading Corporation of India) officials in the city for fraud, further evidence of dodgy accounting in the Union government-run premier foreign trade behemoth has surfaced.
The issue revolves around Rs 17.99 crore MMTC claims it had parked in fixed deposit accounts in the overseas branch of the State Bank of India, Chennai since May 8, 2009, but were missing in its books of accounts.
A few weeks after its branch auditors — appointed by the Comptroller and Auditor General (CAG) – completed their audit on July 5 this year, MMTC asked them to include the fixed deposit sum in their report for the year 2011-12.
So, where did the money vanish? For some unknown reason, the SBI failed to issue Fixed Deposit receipts confirming for the deposits. So, MMTC moved the FD entries to its suspense account on October 31, 2010, its deputy general manager (finance and accounts) V Oorkavalan claimed in his July 31 letter to the auditors. “…the fixed deposit account in the books of regional office Chennai was adjusted by transferring the residual amount to suspense account in absence of proper reconciliation and confirmation from bank,” the MMTC said.
The auditors then poured into MMTC’s suspense account from April 1, 2011 to March 31 this year, but found no such entry. While conveying their finding to Oorkavalan, they said the only entries they found in the suspense account pertained to Shiv Sahai and Sons, Surana Corporation and others. So, where did the MMTC money vanish?
With the mystery getting deeper, three days after they received Oorkavalan’s letter, the auditors on August 3 this year tried to check with the bank where the money was parked.
That was when they learnt that MMTC’s Chennai regional office had just closed the deposits and withdrawn the money. That robbed the auditors of a great opportunity to track the fund trail and made them fume.
In sum, there is no clarity on why the bank did not issue the FD receipts; not at all clear why the amount was not shown in the books; and also no definitive word on whether FDs totaling `17.99 crore was really deposited in the bank in the first place. The auditors did some plain-talking and refused to revisit the balance sheet.
When MMTC’s alleged pressure on the auditors failed to work, its top management urged the CAG to replace the branch auditors in Chennai.
The CAG, however, refused to budge and reappointed them as branch auditors for the year ending March 31, 2013. But since the MMTC management had failed to cooperate, the branch auditors have refused to accept the re-appointment.
Curiously, till July 2 this year, the MMTC’s Chennai branch had not reported the omission of FD entries in its books to its corporate office or its audit committee.
This is not the only dodgy element in MMTC’s books. Its branch auditors alleged that the MMTC had another account with the SBI’s Meenambakkam branch, which was not reflected in the company’s book of accounts during the financial years 2010-12. Surprisingly, the previous auditors and internal auditors hadn’t recorded these omissions during the last three years.
When contacted, M Thayagarajan, MMTC chief general manager, Chennai regional office, expressed his inability to share any information in this regard.