NEW DELHI: With fresh revelations of fraud, the government-appointed Board of Infrastructure Leasing & Financial Services Ltd (IL&FS) has approached the Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED) to initiate criminal proceedings against 14 former directors of IL&FS Financial Services Ltd (IFIN).
The action comes almost a week after the forensic audit report by accounting firm Grant Thornton LLP.
“The report by Grant Thornton LLP clearly establishes money laundering. The Board has already informed the Ministry of Corporate Affairs, SFIO and the ED to initiate criminal proceedings against the culprits, with an enclosed copy of the report,” a senior IL&FS official privy to the development told TNIE.
The new IL&FS Board had hired Grant Thornton to conduct a forensic audit of 12 firms, including IL&FS and IFIN, for the April 2013 to September 2018 period.
The report submitted on February 27 highlighted multiple irregularities in the operations of IFIN, one being that loans were provided to firms, in which an existing director of one of the IL&FS group companies was the promoter. The report had charged 14 former IFIN directors of “facilitating money laundering” and sanctioning loans without any security.
Of IFIN’s outstanding loan book of over Rs 15,000 crore as on March 2018, nearly Rs 7,000 crore of advances, availed of by 50 entities, have turned Non-Performing Asset.The Board has reportedly sent show cause notices to the 14 former IL&FS directors, asking why criminal action shouldn’t be taken against them.
However, the findings aren’t completely new. Earlier, an interim report by the SFIO had named top executives of siphoning off employees’ welfare fund for personal gains and had added that IL&FS directors were involved in diverting loans to their own accounts. The IL&FS Board is likely to meet on March 18 to discuss the findings of the report to plan the road ahead.
Fraudulent loan approvals
The Grant Thornton report highlighted multiple irregularities in IFIN’s operations, one being that loans were provided to firms, in which an existing director of one of the IL&FS group firms was the promoter.