VG Siddhartha
It was found that EY was rendering services in the area of taxation, software and also carried out due diligence of the company or subsidiaries, on behalf of third party clients.
  • Thursday, September 05, 2019 - 08:34

It was "conflict of interest" that led global audit firm Ernst & Young to recuse itself from investigating the letter that Cafe Coffee Day owner V.G. Siddhartha purportedly wrote to the company's Board.

However, EY has not been the external auditor of the company.

"Vide our letter dated August 8, 2019, it was informed that Board of Directors in their meeting dated August 8, 2019 had appointed Ernst and Young to investigate the circumstances leading to statements made in the purported letter of the former Chairman late V.G.Siddhartha dated July 27, 2019 and to scrutinise the books of accounts of the company and its subsidiaries," Coffee Day Enterprises said in a regulatory filing on August 30.

"Subsequently, it has been ascertained by the board in discussions with E&Y that the said firm has certain conflict of interest to carry out the above referred assignment, since they are rendering services in the area of taxation, software and have also carried out due diligence of the company or subsidiaries, on behalf of third party clients."

CCD then had to seek former CBI official Ashok Kumar Malhotra's aid to investigate the letter.

The letter was purportedly written by CCD owner Siddhartha to the company's board on July 27, two days before he went missing and was then found dead on July 31.

On August 30, Cafe Coffee Day in a regulatory filing said that Malhotra will investigate the letter.

New Delhi-based Agastya Legal LLP will assist Malhotra in the investigation into the contents of the two-page letter found in Siddhartha's office in the city on July 30 when a search was conducted to find out if he left any suicide note.

Siddhartha, 60, is alleged to have committed suicide on July 29 night by jumping off the road bridge into the Netravathi river, as his body was found on its banks on July 31 morning.

In the signed letter, Siddhartha claims to be solely responsible for all the mistakes he apparently committed.

"I am solely responsible for all mistakes. Every financial transaction is my responsibility. My team, auditors and senior management are totally unaware of all my transactions. The law should hold me, and only me accountable, as I have withheld this information from everybody including my family," the letter, which was found in Siddhartha's table drawer, said.

The state police is investigating the case to ascertain what drove Siddhartha to commit suicide, and a forensic audit of his personal accounts and company books will reveal the mistakes he claims to have made and the transactions his team, auditors and senior management were unaware of.

The Income Tax department, which was inspecting his office and personal accounts for compliances, claimed Siddhartha's signature in the letter was not the same as in his annual reports, though the company's board confirmed that it was authentic.