Crores missing in MMTC books for years

C Shivakumar

Chennai:

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.

 

Branch auditors of MMTC appointed by Comptroller and Auditor General refused to include a sum of Rs 17.99 crore unaccounted for the last three years in their report for the year 2011-12.

According to documents available with Express, the Union government run premier foreign trade behemoth has asked the auditors to include the amount that was not audited for last three years.

Sources from the auditing firm said that subsequently after the audit was completed on July 5, 2012, the Chennai Regional Office of MMTC in its letter dated July 31, 2012 informed the branch auditors that 18 number of deposits amounting to 17.99 crore, created on May 8, 2009 and May 4, 2009 in the overseas branch of State Bank of India, Chennai were not included in the accounts as on March 31, 2010, March 31, 2011 and March 31, 2012.

 Interestingly, this omission of above deposits by Chennai branch of MMTC were not reported to the corporate office of MMTC nor the audit committee of officers till July 2, 2012 as per MMTC letter written by deputy general manager of finance and accounts V Oorkavalan.  

MMTC also maintained that since no confirmation from the bank, the amount was transferred to suspense account as on October 31, 2010.

Surprisingly, the branch auditors in their letter claimed that on verification of the above suspense account in SBI, it was found that no such amount existed as on April 1, 2011 and also as on March 31, 2012. In their correspondence to Oorkavalan, the auditors said as per the verification there is no such amount available in suspense account except those pertaining to one Shiv Sahai and Sons, Surana Corporation and others.

 The auditors said that it was on August 3, 2012, they wanted to verify the fixed deposit of Rs 17.99 crore at Overseas Branch of SBI but regional office of MMTC took immediate steps to close the deposit account with Overseas Branch of SBI on August 3, 2012 and no opportunity was given to branch auditors to verify the original transaction of Rs 17.99 crore and the source of funds.

Following this the branch auditors refused to revise the balance sheet following which there were allegedly lot of direct and indirect pressures from the top management in New Delhi, the auditors alleged. Interestingly, following the refusal, the top management referred the matter to CAG and sought change in branch auditors in Chennai regional office. However, CAG refused to acknowledge their request and reappointed the branch auditors for the year ending March 31, 2013. In view of non-cooperation of MMTC management, the branch auditors refused to accept the re-appointment.

 The auditors also alleged that MMTC had another account with SBI, Meenambakkam branch which was not reflected in the accounts of Chennai regional office of MMTC as on March, 2010, March 2011 and March 31, 2012. Interestingly, previous auditors and internal auditors has not found out these omissions in the last three years.

When Express tried to contact M Thayagarajan MMTC chief general manager of Chennai regional office, he expressed his inability to share any information with press in this regard.

Interestingly. MMTC in its report has said the auditors appointed at Chennai Regional Office reported during second week of July 2012 that fixed deposits amounting to Rs 17.99 crore originally created during May 2009 were alive with SBI, Chennai. “The said FDRs were however not appearing in the books of accounts of regional office, Chennai as on March 31, 2010,” MMTC said.

“It is also reported that 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,” MMTC said, adding that the amount transferred to suspense account became part of the

Audit queries :

1.   MMTC did not provide details of deposits of Rs 17.99 Cr made on May 8, 2009 and details of source of funds and details of account number of debit entry and credit entry

2.   MMTC did not provide details of transfer of the bank deposit to suspense account along with authorization for transfer of account from deposit to suspense account and account number  in respect of debit and credit entries

3.   Failed to provide a certificate to confirm that the bank deposit is already included in the suspense account as on March 31, 2010 and March 31, 2011.

4.   Failed to provide details of account opened at SBI, Meenambakkam branch in respect of authorization, date of opening the account, person who authorized to operate the account and details of transfer of funds

MMTC take:

1.   Regional office does not make fixed deposits of company’s funds at regional level and those deposits are of bullion customers

2.   The sum of Rs 17.99 crore was held by bank as lien against bank guarantees issued by the bullion customers.

3.   The deposits were overlooked as no confirmations were obtained and it remained unreconciled on March 31, 2010.

4.   It was transferred to vendor suspense account with other unreconciled balances on 31 January 2010.

5.   The amount remained undetected, unconfirmed and unreconciled on March 31, 2011