It looks like heads have finally begun to roll in the real sense in the IL&FS fraud case, the mammoth Rs 91,000-crore scam that caught India unawares a few months ago the after-affects of which are still being felt in many spheres.Serious audit irregularities in IL&FS accounts have prompted the Ministry of Corporate Affairs to set sleuths on the trail of Deloitte Last week, the former CEO of Deloitte was put to a grilling question session by the Serious Fraud Investigation Office (SFIO) on the alleged misconducts and misdemeanors in the IL&FS case.The investigation is being put on fast track following a whistleblower letter sent to the SFIO recently. According to reports by new agency IANS, a lengthy India ban — as much as 5 years — now stares at Deloitte, one of the much-vaunted Big 4 If that happens, it will be the second such ban after that of Price Waterhouse , which was debarred in India over the Satyam scam The Infrastructure Leasing & Finance Services is the holding company of the IL&FS Group. Its operations, domiciled in a number of separate companies, make for an ecosystem of expertise across businesses such as infra, finance, and social & environmental services. IL&FS was founded in 1987 with equity from Central Bank of India, Unit Trust of India and Housing Development Finance Co to fund infra projects at a time when its peers were focused mainly on corporate projects.The mess came to light after IL&FS Financial Services — one of the group companies — defaulted on servicing bank loans (interest included), term and short-term deposits. It also failed to meet the commercial paper redemption obligations due in mid-September last year.On September 15, the company reported that it had got notices for delays and defaults in servicing some of the inter-corporate deposits accepted by it. Subsequent to these defaults, ICRA downgraded its short-term and long-term borrowing programmes.The defaults put a great many investors, banks and MFs associated with IL&FS in danger, sparking huge panic among equity investors.Senior Deloitte functionaries knew what exactly was happening inside the group led by Ravi Parthasarthy, the report said citing the whistleblower's communique. Deloitte — IL&FS' auditor for over a decade — had benefited massively from this collusion by way of exorbitant fees and huge contracts, said the letter.The highly complex structure of IL&FS, which left investigators astonished, was in part Deloitte's doing as this labyrinthine structure was a result of its recommendations, the whistleblower account revealed.At the time of the unravelling, IL&FS had 347 subsidiaries — most of them overseas — spread across an extremely opaque, sprawling structure."The Parthasarthy-led closed user group, which ran like a secret society, controlled the company's narrative for 30 years in a completely unprofessional and opaque manner. Deloitte was part of this cosy club arrangement benefiting immensely," IANS cited the whistleblower's letter as saying.The letter made several explosive allegations as to how Deloitte was hand in glove with the Parthasarathy clique. The IANS report lists them as under:— In cases where there were audit positions to be taken which were not in a favourable light for IL&FS, the top management would meet and coerce the Deloitte partners for a more favourable or a watered-down position.— Whenever there were any dubious findings, Deloitte agreed to go with management explanations and comfort letters, which greatly compromised its independent position.— In many cases, the language of the management response was agreed to beforehand by Deloitte in making its conclusions.— Internally, several views in matters of audit were watered down by the Deloitte leadership in the first instance. Over the years, this made the entire audit process susceptible to legacy position, making financial misreporting a norm rather than an exception.— Financially, the group paid Deloitte additional fees as consultancy services for mutual benefit.Reports say the government is now looking to invoke the dreaded Section 140(5) of the Companies Act in the matter. The operative part of the law stipulates that — "Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the Tribunal either suo motu or on an application made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company to change its auditors."In the event of such a ban, Deloitte will join the ignominious league of Price Waterhouse (PW) which Sebi debarred from auditing listed companies and market intermediaries for two years in the Satyam fraud.(Inputs from IANS)