Deloitte Touche Tohmatsu is battling serious allegations of fudging the numbers to suit its client’s needs. Deloite agreed that it inflated the valuation of a media company owned by YS Jagan Mohan Reddy, MP and son of former Andhra Pradesh chief minister YS Rajasekhara Reddy, and also pre-date the valuation report, which is used to raise thousands of crores.

The CBI had recently recorded the statement of Deloitte’s senior director P.N. Sudershan under CrPC Section 164. According to the statement, Jagati Publicati-ons’ value was increased from Rs 2,500 crore to Rs 3,500 crore.  Mr P.N. Sudarshan, senior director of Deloitte Touche Tohmatsu India Private Limited has made a statement before a magistrate that the company had been pressurised by the auditor of Kadapa MP Y.S. Jagan Mohan Reddy’s Jagati Publications Limited to overvalue the firm. Mr Sudarshan said that the auditor of Jagati Publications, Mr Vijay Sai Reddy, had told them that the report was for internal audit purposes only but the same was later made public and shown to prospective investors of Jagati.

JAGADEESAN & CO. VALUATION OF Rs.197Cr.  IN 2007

Deloitte valued Jagati at about Rs3,500 crore in 2008. However, the auditing major dated it to 2007. The valuation was alleged to be many times more than the actual valuation done by another auditing company based in Chennai — Jagadeesan and Co. The Chennai firm valued the company at about Rs196 crore in 2007. Jagadisan and Company of Chennai, had valued the three firms at Rs 410 crore including Jagati at Rs 196 crore, Indira TV at Rs 185 crore, and Janani Infra at Rs 29 crore.

DELOITTE FUDGED VALUATIONS IN 2008 – Rs.3500 Crores

However, Jagati approached Deloitte for a fresh valuation in 2008 and the firm is accused of inflating the value of the asset, which was earlier valued by the Chennai firm, at about Rs3,500 crore.

The CBI recorded Mr Sudarshan’s statement as witness under 164 CrPc before the magistrate in the same way it had recorded the statement of Congress leader, Mr Varadarajulu Reddy’s son, Mr Konda Reddy, in the Obulapuram Mining Corporation case. Jagati Publications was valued at around Rs 3,500 crore by Deloitte. Sources said that Mr Sudarshan stated that acting under pressure from Mr Vijay Sai Reddy, Deloitte had given the inflated valuation.

CHANGED DATES OF VALUATION REPORTS

In order to get valuation Jagati publications provided information through emails, reports, USB drives,phone converstations between November 2007 and April 2008. Sudarshan had told that Vijay Sai Reddy, Jagati’s auditor, had approached Deloitte in 2008 to do a fresh valuation to the extent of about Rs3,500 crore. For reasons that are still not in public domain, the Deloitte officials agreed to the proposal and jacked up the value while projecting a profitable future for Jagati.  With the data provided by Jagati publications the initial valuation report was at Rs.2500 crores and later with additional information the valuations were changed to be more than Rs.3000 crores. Though the actual work was completed in and around April 2008, Vijai Sai Reddy seems to have requested Deloitte to date the reports as 16th November ,2007 for which Deloitte obliged by dancing to the tunes of ‘influential’ client by giving valuations at “predetermined” valuation as dictated by Jagati Publications.

“Apparently, the Jagati officials told Deloitte that the report was purely for internal consumption and would not be used for any other purposes,” a source said.

Investors blame game on Deloitte

The CBI has already named Mr Vijay Sai Reddy, vice-chairman and former auditor of Jagati Publi-cations, as an accused. The investors had told CBI that they had made the investments based on the audit report of Deloitte. Mr Sudarshan said the company had submitted the valuation report in 2007 relying on the documents provided by Mr Vijay Sai Reddy. It did not verify the details.

However, even as the report was being prepared by Deloitte, Jagati raised funds from various sources, including some of the brief-case firms located in Kolkata. However, the fund-raising at a rate of Rs350 per share of `10 each was justified based on the report provided by Deloitte.

Deloitte’s Sudarshan is said to have narrated the entire flow of events to the CBI and the statement was registered in the presence of a magistrate. The statement is likely to bring in more trouble for Jagati and Deloitte.

The Institute of Chartered Accountants of India has initiated an inquiry against Deloitte Touche Tohmatsu Ltd over the alleged increase of valuation of Jagati Publications owned by YSR Congress leader Y. S. Jagan Mohan Reddy. It is reliably learnt that Deloitte, which is trying to wriggle out of the mess, is contemplating legal action against Jagati Publications for breach of contract.

Alleged Investments Flow as per Telugudesam.org

http://telugudesam.org/jagancorruption/flow-of-funds/