* India asked for 5-yr ban on Deloitte, KPMG arm in fraud case
* Case part of probe into alleged fraud and mismanagement at IL&FS
* Deloitte says will review order and decide on course of action
* KPMG affiliate says it will appeal the order
By Abhirup Roy
MUMBAI, Aug 9 (Reuters) - An Indian tribunal on Friday rejected an appeal by the auditors of debt-laden Infrastructure Leasing & Financial Services (IL&FS), challenging the court’s jurisdiction to ban them for alleged abetment of financial fraud.
The government has asked for a five-year ban on Deloitte Haskins & Sells LLP and a KPMG affiliate for allegedly aiding and abetting a financial fraud at IFIN, a unit of IL&FS, whose debt defaults last year triggered fears of a financial contagion and spooked investors. Both firms have denied any wrongdoing.
Deloitte said it will review the order issued by the National Company Law Tribunal (NCLT) and decide on a course of action shortly, while KPMG affiliate - BSR & Associates - said they will appeal the order.
As part of a widespread probe into an alleged fraud and mismanagement at IL&FS, India detected at least 22 violations of auditing standards by the auditors, according to legal filings seen by Reuters.
The auditing firms gave clean audit reports and “deliberately” failed to report fraudulent activities at IFIN, according to the filing.
The alleged fraud was exposed last autumn, and Deloitte and BSR had said the law only allowed such a ban to be imposed if the auditor was actively auditing the company at the time, and did not allow the government to take into account the firm’s work over previous years.
The case will be heard by the NCLT on Sept. 5. (Reporting by Abhirup Roy in Mumbai; Writing by Chandini Monnappa, Editing by Sherry Jacob-Phillips)