IL&FS board charges former directors of money laundering, criminal intent

Tasked with cleaning up of the colossal financial wreck in embattled IL&FS, its own authorities appointed board has charged 14 former directors of staff firm IL&FS Financial Services Ltd facilitating money laundering, loan authorization in violation of the rules and causing enormous financial strain and reductions to the company. In show cause notices issued to the 14 former directors, the new administration has billed them of getting sanctioned loans to outside and group businesses with the sole objective to infringe RBI guidelines of excessive exposure of IFIN to intragroup businesses.”.

They’ve been accused of loans to get the intention of falsification of refund with a number of borrowers, including some entities associated with large groups. The finds, dated Feb 27, have asked former directors to respond within 7 days upon receipt why departmental and lawful actions shouldn’t be taken against them for their misconduct, dereliction of duties, gross neglect and acts of conspiracy and getting unlawful profits for oneself and others”. Officials said no reply has been obtained from some of the 14 noticees and the board has been set to follow up the finds with stern action, which might include the filing of cases.

When contacted, IL&FS spokesperson Sharad Goel declined to comment. The finds follow a special audit ordered by the new board and conducted by Grant Thornton of catastrophe hit IL&FS Group, which identified fiscal irregularities in deals with fiscal implications of over Rs 13, 000 crore. IL&FS Group, which operates at least 24 direct subsidiaries, 135 direct subsidiaries, six joint ventures and 4 associate companies, is sitting on the debt of Rs 94, 000 crore and landed at a major controversy last year following numerous defaults, prompting the authorities to supercede its board. The analysis report has identified at least 29 cases where loans disbursed to borrowers appeared to have been employed by their group businesses to settle the present debt obligations with IL&FS Financial Services Limited.

LIC is the single largest shareholder with over 25 per cent stake in IL&FS and also Orix Corp of Japan owns a bit. IL&FS Employees Welfare Trust holds 12 per cent in the company. Abu Dhabi Investment Authority, HDFC and the Central Bank of India maintain 12.56 percent, 9.02 percent and 7.67 percent, correspondingly, at the cash strapped company. SBI has the smallest package at about 7 percent, at the company. From the show cause notice, former IFIN directors have been charged with punishing loans worth thousands of crores to particular entities by overlooking negative assessment by the credit risk assessment group and without recording any cogent justification, despite having full knowledge that the assets of the debtor entities were worried.

In addition to, loans given to many entities have been written off, the note said, while charging the former directors of being prima facie accountable for causing financial stress and reductions to the company by acting at a malafide way”.