NEW DELHI: From extending personal favours, like facilitating purchase of expensive villas, arranging tickets for football match in Madrid to manipulating and delaying the rating reports, former IL&FS top officials did it all to keep the distress in the company, which they seemed to be aware since 2011, under wraps and from reflecting in its credit ratings.
A Grant Thorton audit report, which reveals the size, scale and nature of collusion between honchos of credit rating agencies and IL&FS group companies, said, "The emails (exchanged between them in September 2015) indicate the potential liquidity issues."
"We have identified a September 24, 2015 email, sent by Ramesh Bawa, former managing director and chief executive of IL&FS Group companies, to Hai Sankaran, former IL&FS Vice-Chairman, where they share a note discussing issues in ITNL on account of cost overrun in various projects. The note also highlighted that increase in commercial papers' use was raising the bourses' suspicion on the ITNL liquidity."
Both of them were arrested on charges of fraud after investigation. The Grant Thorton report indicates to several emails, from 2015 to 2018, that showed the former IL&FS management discussing about early stages of the crisis. But they did not move to correct them. They just strived to hide it by coaxing and cajoling the rating agencies.
Even prior to it, the report pointed to a November 21, 2011 email, sent by Sushil Khandelwal to Sujoy Das (both IL&FS executives), highlighting concerns of CARE, ICRA and Fitch pertaining to profitability, divestment, weak exposure in the group companies.
Most top rating agencies - Crisil, CARE, Icra, India Rating (Ind-Ra) and Brickworth that assess the financial strength of a company, especially their ability to meet principal and interest payments on debts - failed to flag IL&FS Group companies' dwindling finances from June 2012 to June 2018.
Rating agencies consistently maintained 'high safety' rating for IL&FS Group till the time one of the companies defaulted on the Rs 450 crore inter-corporate deposits and commercial papers (borrowings) in June 2018, triggering a spate of defaults.
Ratings were sharply downgraded to 'default', catching investors and lenders off-guard, sending shock waves through the Indian financial markets. On this tip of the iceberg, the Grant Thornton report says, "We are only able to review emails where official IDs been used."
A trail for emails, exchanged between executives of rating agencies and IL&FS Group companies, showed the instances when the infrastructure & leasing giant expressed unhappiness over ratings and the agencies acceding to their wishes by assigning favourable ratings.
If the language of the official emails shows such a blatant disregard for the standards of corporate governance, what could have been the nature of discussions at meetings between high-ranked IL&FS officials and rating agencies, as well as in private texts and messages, that no one has access to.