IL&FS case: SFIO files complaints against 30 accused
The Serious Fraud Investigation Office (SFIO) on Thursday registered a complaint against 30 persons and entities in connection with the Infrastructure Leasing and Financial Services (IL&FS) case, being probed for alleged irregularities which resulted in a default crisis for the company.
The accused include members of the management of IL&FS Financial Services (IFIN) — Ramesh Bawa, Hari Sankaran, Arun Saha, Vibhav Kapoor, Ravi Parthasarathy and K Ramchand; chairman of Siva Group — C Sivasankaran; and members of audit committee and independent auditors. Of the 30 accused, the SFIO has arrested Sankaran and Bawa.
In their complaint, SFIO claimed that IFIN extended loans to external parties, many of which had already begun defaulting.
This included loans given to Siva Group, apart from those given to its own group of companies. The agency claimed that the top management knew of the probable stress because of the loan defaults. The IFIN management adopted “fraudulent practices” to not let these loans or credit facilities be classified as non-performing assets, violating many guidelines set by the central bank, SFIO stated in the complaint.
IFIN also resorted to fresh lending to various group companies, either directly or through another group companies to repay the earlier loans and prevent defaults, SFIO claimed. According to the agency, none of these companies, which were used for onward landing, had started operations and did not have any upcoming projects. In many cases, the CAMs mentioned that these were for onward landing. The interest of group companies overrode the interest of IFIN and its stakeholding in such lending, the SFIO claimed.
SFIO further stated that IFIN’s lending to its group companies increased significantly from the financial year 2012-13 and more than doubled to around ₹5,200 crore —37% of the total loan and advances—in 2017-18.
The probe revealed that the company advanced the borrowed funds to borrowers to pay outstanding interest to IFIN. It resulted in overstatement of profits, which were the basis for payment of higher dividends to the holding company, IL&FS Ltd.
The agency claimed that the management presented a rosy picture of the financial statements, which were used to access public funds.
IFIN management did not report the true state of affairs of the company, particularly negative net-owned funds (NOF) and negative capital to risky asset ratio (CRAR), which had caused losses to creditors and the companies which had invested in the NCDs, the SFIO claimed.