When CFO Blinks: Why Finance Leaders Must Speak Truth to Power

In today’s compliance-driven world, CFOs are no longer just number-crunchers. They are the conscience keeper of financial discipline, stewards of transparency, and the first line of defence when governance is under threat. But what happens when that line blurs?

The unfolding crisis at Gensol Engineering, a solar and EV solutions firm saw an alleged corporate fraud probe, where the Securities and Exchange Board of India (SEBI) has alleged fund diversion of Rs 775 crore (in loans from IREDA and PFC) routed to the related party Go-Auto, out of which only Rs 567 crore was used for purchasing EVs. The remaining funds were allegedly funneled through layered transactions to Capbridge Ventures LLP and ultimately used to buy a luxury apartment at DLF Camellias in Gurgaon.

These revelations suggest that company funds may have been used to finance personal assets, raising serious questions not only about the promoters’ conduct but also about the role and accountability of the CFOs, two of whom held the position during the period under scrutiny.

The right course of action

Ashok Haldia, former Secretary, ICAI and governance expert, opines, “Whether a company is promoter-led or not, the CFO’s responsibilities and consequent liability do remain the same. In fact, in a promoter-led environment, the CFO needs to be even more vigilant when it comes to suspicious or Related Party Transactions (RPTs).”

The CFO should be proactive in setting up appropriate processes and controls to check potential malpractices and should insist on compliance with those. They should ensure maintaining arm’s length, obtaining requisite approvals and transparent disclosure of RTPs, he explains.

“Importantly, under SEBI’s listing obligations, detailed information on RPTs is required to be given to the audit committee, and both the audit committee and the auditors are required to review and apply their minds. This gives the CFO institutional backing—if they take a strong ethical stance, they are protected by law and the governance mechanism within the company. It is their job to act as a gatekeeper, conscience keeper, and ensure compliance and financial discipline,” says Haldia.

In October last year, Gensol Engineering announced the appointment of Ankit Jain, succeeding Jabir Mahendi Aga as the CFO. In five months (March 2025), Jain resigned to pursue other opportunities as per the official release, while Aga was reappointed as CFO. Both, at different points, held the reins during critical financial disbursements and fund movements—yet neither appeared to ring the bell when the money trail veered from regulatory norms.

Gensol, not an isolated case

In recent years, the credibility of CFOs has come under scrutiny in several major corporate failures, like the 2018-IL&FS collapse, 2019-DHFL default, and Yes Bank's misreporting of NPAs. More recently, ICAI launched a six-month review of IndusInd Bank’s financials (alongside Gensol’s) following allegations of improper income recognition and possible NPA underreporting, again putting CFO oversight in question.

Speaking truth to power, what does that mean? 

Ashok Haldia is blunt about what must change: “If he (CFO) is aware of malicious RPTs or diversion of funds and feigns ignorance or does not act to prevent, he may face civil as well as criminal liability,” Haldia says.

In promoter-led firms, where pressure to bend the rules can be subtle or direct, Haldia says the CFO must "speak truth to power". “If a CFO feels sidelined or coerced, they have recourse—report to the audit committee, escalate to the board, and if necessary, to the concerned authorities.

The CFO should focus more on his fiduciary and legal responsibilities. “If he abdicates, the company pays, the stakeholders suffer,” he says.

But is it that simple? Robin Banerjee, a finance and governance expert, highlights a deeper dilemma: “CFOs are sometimes unable to say ‘no’ to promoters because their job security is at stake. The fear of being replaced often leads to silence. CFOs hope that things will eventually be corrected, especially when the promoter reassures them with lines like “Don’t worry, I’ll fix it soon.” But the toughest question remains, “When do you say ‘no’?”

Banerjee is the chairman of a global clinical research organisation, Nucleon Research, and has authored three books on corporate fraud. 

He explains, “Speaking truth to power means telling the promoter exactly what the risk is, what they’re doing wrong, and what the fallout could be. That’s the only real power a CFO has. But doing so effectively is a skill. It involves timing, tact, and the ability to present the truth not as confrontation, but as strategic advice for the long-term good of the company.”

He says the system must evolve to support such truth-tellers. Without institutional backing—stronger audit committees, independent boards, and serious consequences for promoter misconduct—CFOs will remain exposed.

And it's not just CFOs—the Company Secretary (CS) community faces a similar dilemma. A CS signs off on the balance sheet too. Sometimes, even if they suspect something, they go ahead and sign, thinking, “It’ll be fixed by next quarter.” So the challenge of choosing between integrity and pressure isn’t limited to CFOs—it equally affects CSs, who also carry legal and fiduciary responsibility.

What happens if CFOs say ‘no’? Do they risk being shown the door, only to be replaced by someone else who might agree more easily?

Banerjee believes that unless promoters are caught and held accountable, the burden of compliance and accountability unfairly falls on professionals like CFOs, company secretaries, and auditors.

Ultimately, CFOs often face a grim choice: either convince the entrepreneur to fix things internally or resign. There’s rarely a middle path. These are not textbook dilemmas—they’re real, and nuanced. In theory, there are protocols. In practice, the risks—personal and professional—are immense.

A scandal doesn’t just harm the company—it devastates the CFO’s reputation, often permanently. Even if the CFO was not complicit, they’re seen as part of the leadership team that allowed the wrongdoing, Banerjee lays down the harsh realities.

So, what should a CFO do when put in such a situation? 

According to the experts, many promoters don’t listen. They still treat a public limited company as if it were their private proprietorship. That’s the root of the problem: a refusal to accept the shift in accountability that comes with public ownership. The mindset needs to evolve.

Society and corporate governance cultures have to evolve together, Banerjee says. As CFO professionals, one needs to keep cautioning the promoters, pushing for ethical practices, but systemic change won’t happen overnight, Banerjee adds.

In every one of these scandals—Gensol, IL&FS, DHFL—the systems either failed or were bypassed. The CFO is among the professionals who must ensure this doesn't happen. That’s the real legacy of the role.

And when the CFO does speak up, the law protects them. SEBI, under its latest Related Party Transactions (RPT) regulations, mandates clear board and shareholder-level approvals. Whistleblower protections also exist under the Companies Act and SEBI’s (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) guidelines.

The Way forward

The Gensol case may still be under investigation. But the writing on the wall is clear: a silent CFO is as dangerous as a rogue promoter. 

There is no doubt that a CFO has the responsibility to raise a red flag. The role demands oversight, compliance, and financial discipline. Much like a pilot blinking at the moment of turbulence, it implies that the person entrusted with keeping the financial course steady missed or avoided taking a stand, with potentially disastrous consequences for the company’s integrity and credibility.