This newspaper reviewed a draft report of that forensic audit — covering financial expenses during 2017-18 and 2021-22 — prepared by Baker Tilly Business Advisory Services and submitted by the administration in November 2022 to the National Company Law Tribunal (NCLT) as part of a quarterly status report.

The findings are telling.

Reviewing catering sales data, the draft report listed 31 potential instances of alleged billing in the names of “expired members”, concluding that the possibility of non-members enjoying the club’s facilities could not be ruled out.

Asked about the contents of the draft report and club records reviewed by this newspaper, club president Malay K Sinha declined to comment, saying “every matter of Gymkhana is in some court or the other”.

When contacted, club veteran and former General Committee member Major (Retired) Atul Dev said, “After a member’s death, the wife becomes a member under the Lady Subscriber category. This process may take some time, and it is possible that some deceased members’ cards were continued to be used by their wives under the advice of the club management till their own cards were issued.”

Questions about the alleged misuse of members’ cards resurfaced in 2024. According to a general diary entry on July 13 that year at the Chanakyapuri police station, the club’s Food and Beverage manager Rajesh Bhatnagar allegedly misused the card of an ailing, elderly member to buy drinks for four unauthorised guests and made the payment in cash. Asked about the allegations, Bhatnagar, who now also serves as Gymkhana’s officiating secretary, said: “I have received your mail. I’ll do the needful.” However, he did not respond to subsequent emails or messages.

The final forensic report was submitted shortly after the draft, and a five-member committee constituted in December 2022 to examine the findings recommended follow-up action in March 2023. Three years on, the final report remains under wraps.

Conflict of interest, high legal fees

The draft forensic report, meanwhile, recorded multiple instances of club members being allegedly engaged as vendors and lawyers. They include:

lEight instances “where directors of the vendor companies (including relatives) are members” of the club, and total purchases of Rs 36 crore between 2016-17 and 2020-21 from vendors who were “not disclosed as related parties”.

lMembers appointed as the club’s lawyers and paid a total of Rs 1.95 crore, including Rs 77 lakh to Arun Kathpalia, Rs 28.76 lakh to Gaurav Mohan Liberhan, and Rs 20 lakh to Harish Salve.

The new governing body stopped hiring club members as lawyers after it took charge in April 2022. But, records show, that did not bring down the club’s legal bill — from Rs 1.84 crore in 2021-22 to Rs 2.09 crore in 2022-23. From 2018-19 to 2022-23, records show, the club spent Rs 8.22 crore on litigation.

Noting that “legal costs have become a material cost incurred by the Club”, the 2022-23 auditor’s report repeatedly highlighted legal expenses as an area where verification was difficult because of incomplete records, unavailable legal files, and lack of information regarding the duration and status of litigation matters.

Auditor raises red flags

In its 2021-22 audit report, auditor Khanna and Anandhanam raised multiple red flags, including club expenditure not controlled through a budgeting process, no internal audit, lack of internal control over financial reporting, mismatch between accounts maintained in software and in manual records and unavailable records.

These alerts reappeared in the 2022-23 report after the Government-appointed management took charge with the stated purpose of ushering in reforms and best practices.

After nine years, records show, Khanna and Anandhanam resigned with effect from March 31, 2024, citing the impending retirement of one of its partners who handled the Gymkhana account. The club’s last annual general meeting, held in December 2023, refused to approve its accounts.

In the 2023-24 annual report, new auditor AVA & Associates also raised the issues of not having access to certain club records, including the Baker Tilly forensic audit report, delay in completing remedial actions and heavy legal expenses.

Case of a mystery drone

A reference to the club’s location as “a highly sensitive and strategic area of Delhi” in the latest Government notice has also revived the spectre of an alleged security breach in August 2022 — related to the use of a drone allegedly from the club premises, which shares a boundary with the PM’s residence.

In a note to the Ministry of Corporate Affairs dated October 1, 2022, the Delhi Police acknowledged a complaint that certain officials of the club “and some anti-social elements carried out the drone activities in the prohibited area endangering the security” of the Prime Minister.

“During inquiry, it was revealed that an unauthorised Tiranga Yatra was carried out on 13.08.2022 at a place where movements of VVIPs were expected soon… Investigation is in progress. Accordingly, action will be taken against the violators,” the note said.

In June 2023, an inspector with the Chanakyapuri police station told a Patiala House court that a “concerned security agency” detected, through its technical equipment located at Lok Kalyan Marg, drone activity for approximately two minutes on August 13, 2022, but information on the “exact location” was still awaited.

Asked if a closure report was filed, a senior officer with the Chanakyapuri station said the case was transferred to the Economic Offences Wing (EOW). When contacted, a senior EOW officer could recall “no such case, which would anyway fall outside the EOW’s scope”.