A month after the Serious Fraud Investigation Office (SFIO) submitted its first report over debt-ridden Infrastructure Leasing & Financial Services (IL&FS), the investigative agency is planning to soon initiate action against its former management and board members.“What we have submitted in December was the first report. The enquiry is still on, and in the next couple of weeks, you will see more actions. We have zeroed in on a few members of the previous Board, against which we have enough evidences of financial fraud,” a highly placed official in the Ministry of Corporate Affairs told TMS.
However, he did not specify names. “I cannot give any name at this stage. All I can say (is that) it is some members of the former top management of the company,” the official added.The SFIO had submitted its interim report to the NCLT on December 3, pointing out irregularities in corporate governance and also the financial parameters that triggered payment defaults.
It had charged former IL&FS chairman Ravi Parthasarathy and eight other top executives with causing immense damage to the infrastructure financing firm by window-dressing financials, diverting funds in the form of loans and reaping personal benefits by way of “high managerial remunerations”. The charges against some of the former directors include masking the true state of the group’s financial stress, suppression and misrepresentation of key facts, siphoning off of funds via excessive executive package and gross financial mismanagement.
“This is an act of fraud causing indebtedness of over `91,000 crore to IL&FS. This is deliberate, wilful, fraudulent act of the directors, who were mind controlling the affairs of IL&FS with the intention to defraud creditors, who too had failed in their due diligence,” the SFIO report said.
The report adds that they arbitrarily disbursed over `400 crore in loans to the employees’ trust, despite being aware of the fact it would not be repaid.
According to SFIO officials, the agency is likely to present its second report soon and after getting a formal nod, may initiate action against the said officials. So far, the government had already issued lookout notices at airports against IL&FS’ top management, including former vice-chairman and managing director Hari Sankaran, former MD Ramesh Bawa and director K Ramchand.
Meanwhile, the government has moved NCLT to reopen the ledgers of past five years of IL&FS and its subsidiaries under Section 130 of the Companies Act. The MCA in its petition has submitted a report on the views of Institute of Chartered Accountants of India on IL&FS Groups’ accounts.