International Firms Corrupting India

Duff and Phelps, Kroll and Ashwini Mehra, a Resolution Professional Defraud an Indian Education Company undergoing Insolvency, IBC 2016 needs protection! 

A Case Study of the Insolvency Proceedings of An Indian Education Company

The need of effective implementation of anti-corruption laws and revision have often been suggested by Non-Resident Indians (NRIs) and representatives of Foreign entities when they complain about corruption in India. The revelation that International firms often engage and incentivise practices of corrupt individuals pours water on such discussions and suggestions. 

Based on a whistle blowers’ report, a formal complaint has been filed with the Insolvency and Bankruptcy Board of India (IBBI) as well as the National Company Law Tribunal (NCLT) about a corrupt resolution professional Ashwini Mehra, who is currently a Resolution Professional (RP) for the Corporate Resolution Insolvency Process (CIRP) of Educomp Infrastructure and School Management Limited (EISML) highlights such a case. He has roped in Kroll, a Manhattan based global corporate investigations’ and risk consulting firm for insolvency proceedings overseen by him. Ashwini Mehra is also using the services of Kroll Inc.’s parent company, Duff and Phelps, a New York based Global Valuation and Corporate Financial Advisor, for back office support for the resolution process. Based on a whistle blowers’ report, it is possible that both international entities are co-conspirators attempting to defraud an Indian corporate. 

As per a whistle blowers’ report, it appears that Ashwini Mehra is in cahoots with Om Pathak, Chairman – DPS Society Ghaziabad and Mr. Manoj Maheshwari, former RP for the CIRP of EISML to get a favourable outcome for DPS Society (Ghaziabad), a resolution applicant. To do so, besides being in constant contact with co-conspirators, e-mails exchanges reveal that he has shared confidential information, meetings of the Committee of Creditors and has also been directed by Om Pathak for finalizing the strategic paper for the CIRP of EISML. DPS Society also got a head start in comparison to other applicants due to a former association of Mr. Ashwini Mehra and Mr. Om Pathak. Mr. Ashwini Mehra is on the board of Governors of SelaQui International School of Dehradun, of which Mr Om Pathak is the Chairman. 

It can be speculated that Kroll is also a co-conspirator in this fraud and so the authenticity of its audit report of the corporate debtor can be “questionable,” to put it mildly. It is ironical that Kroll, a company with the motto is “Prevent, Respond To and Remediate Global Risk” has no qualms to be associated with or rather engage with corrupt individuals. 

Duff and Phelps has a consultancy agreement with Ashwini Mehra for a duration of one year from December 1, 2017 to November 30, 2018 in which it is explicitly mentioned that he will get a percentage of net profit for converting a business opportunity to a client. This value is doubled if he continues to provide services in execution of such an engagement. Considering that expected date of closure of Insolvency Resolution Process is October 22, 2018, Ashwini Mehra is likely to profit from the appointment of Duff and Phelps to facilitate the CIRP. Duff and Phelps already transferred INR250000 to his account prior to his appointment as the RP for the insolvency proceedings for this case. As Duff and Phelps proclaims to be an expert in providing dispute and legal management and has a Mumbai based entity namely D&P India Reconstructing LLP, it seems unlikely that its representatives are unaware that a RP must not be employed or get financial assistance from other sources. The act of its representatives to lure corrupt individuals by incentivising their act instead of reporting it, is despicable.

As per this consultancy agreement offered by Varun Gupta – Managing Director, Leader, South East Asia and Japan – Duff and Phelps, Ashwini Mehra is contract bound to provide services to Duff and Phelps and its group entities. So, it is possible that Mr. Mehra is entitled for a success fee for having both Duff and Phelps and Kroll on board for the insolvency proceedings overseen by him. 

EISML is a subsidiary of a pathbreaking education company which set the ball rolling for e-solutions in the education sector in India. Now in financial ruins, this company had achieved several landmarks in India and is also renowned globally. 

The evidence seems to be irrefutable. If it is in fact irrefutable, IBBI and NCLT will do right by this country to weed out corrupt insolvency professionals like Ashwini Mehra and international firms like Kroll Inc as well as Duff and Phelps so that the sanctity of Indian laws and ethical conduct can be restored in the Indian corporate sector. The most effective way to do so is to withdraw the licences of both Mr. Ashwini Mehra, Duff and Phelps, Kroll Inc and other co-conspirators, thereby imposing an effective ban on them to operate in India.  

With corrupt international firms circling over the Indian corporate sector like vultures, empowering practices of corrupt individuals to defraud Indian companies, it is about time that India wakes up to this threat and prevents it from causing more damage.