Deloitte to sue Jagati Publications - TeluguPeople.com News

Hyderabad: Is Deloitte Touche Tohmatsu India Pvt Ltd contemplating legal action against Jagati Publications Private Limited owned by Kadapa MP YS Jagan Mohan Reddy for breach of contract?

Jagati Publications (JPPL) engaged Deloitte to do its valuation, and one of the clauses in the agreement was that the valuation report would be used only for internal audit purposes.

But JPPL allegedly used the valuation report to lure investors and raise loans. Interstingly, the same valuation report was presented to the Income Tax department and CBI which are investigating different aspects of the source of investments in JPPL.

Sources disclosed that as per the agreement between JPPL and Deloitte, it was mutually agreed that the valuation report was meant only for the internal purposes and not for anything else.

Representatives of both firms signed on the agreement. Deloitte and another Chennai based consulting firm, Jagadeesan and Company were engaged by JPPL to do the valuation.

Sources said JPPL used the report to raise huge loans from banks and attract investors who, based on the valuation report, invested crores of rupees.

Surprisingly, JPPL showed the same valuation report to Income Tax authorities and CBI in their probe of Jagan's tax returns and alleged illegal assets. 'They used the valuation report whereever it suited their interest,'' sources said.

PN Sudershan, senior director of Deloitte, who was grilled by CBI and whose statement was recorded before a magistrate, reportedly told the agency that JPPL's finance director and auditor Vijay Sai Reddy had told the company that the valuation report was for an internal audit but was later made public.

Sources said Sudershan told the agency that JPPL was originally valued at `2,600 crore but upon alleged pressure from Vijay Sai Reddy, it was raised to `3,050 crore. He allegedly said Vijay Sai Reddy provided the entire information and figures on the basis of which to overvalue JPPL.

However, what has surprised CBI officials is that Sudershan, who had during his questioning by CBI maintained that he was threatened into the overvaluing action, toned down the language when his statament was recorded.

Instead of using the word 'threatening,' he chose to say that Vijay Sai Reddy had 'urged and requested' him to inflate the value of JPPL.

It is reliably learnt that Deloitte, which is trying to wriggle out of the mess, is contemplating legal action against JPPL for breach of contract.

However, when CBI reportedly questioned senior employees of another consulting firm Jagadisan and Company, they have so far stood by their valuation and said no one had pressurised them.

They are reported to have valued JPPL at over `3,000 crore. All the hard disks which contain the communications between Deloitte and Vijay Sai Reddy are in the custody of CBI.

When contacted, a spokesperson for Deloitte said it was not proper for them to comment on pending investigations. He said the firm's assignments have been performed with the required level of professional standards.