14 ex-directors of IL&FS get notice for laundering, fraud, payoffshttps://indianexpress.com/article/business/companies/ex-directors-of-ilfs-get-notice-for-laundering-fraud-payoffs-5611134/

14 ex-directors of IL&FS get notice for laundering, fraud, payoffs

The charges include specific instances of directors of a borrower entity, who also happened to be directors of IL&FS group companies, and a case where a large portion of the loan given to a company was later transferred into the account of its directors.

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Giving them a time of seven days to respond to these allegations, the company has threatened to initiate departmental and legal action against the directors. (File photo)

In a show-cause notice issued to 14 former board directors of IL&FS Financial Services Limited (IFIN), including former IL&FS chairman Ravi Parthasarathy and Hari Sankaran (former vice chairman of IL&FS), the new management of IL&FS has charged these directors with “facilitating money laundering,” sanctioning loans without any security and “conspiracy and getting unlawful gains,” among others.

The charges include specific instances of directors of a borrower entity, who also happened to be directors of IL&FS group companies, and a case where a large portion of the loan given to a company was later transferred into the account of its directors.

Giving them a time of seven days to respond to these allegations, the company has threatened to initiate departmental and legal action against the directors.

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In one of the eight charges against the directors, the notice said: “You have been responsible for facilitating money laundering by following entities who have diverted the loan amount to individual accounts of the directors of the borrow company.

In one instance, Shri Siddharth Dinesh Mehta, the director of the borrower company has been a director of IL&FS group company IEDCL. Inspite of above, you failed to take any action which shows conspiracy in loan sanctioning.”

In another example cited in the notice, the company states that of the Rs 100 crore loan to Prism International Private Limited, a unit of Gateway Distriparks Group, Rs 82.5 crore was transferred into the account of a director of the borrower company, Prem Kishan Gupta. In fact, Gupta is the chairman and MD of Gateway Distriparks.

In another case, of the loan of Rs 28.99 crore to Bay Capital’s Indus Equicap Consultancy, Rs 2.95 crore was transferred to personal account of Siddharth Dinesh Mehta who was both a director of the borrower company and also a director in IL&FS group company IEDCL.

Another notice states that that of the loan of Rs 515.5 crore given to Flemingo Geowork’s Infra Projects Pvt Ltd, Rs 8.81 crore was transferred into the account of Viren Ahuja, the promoter of the borrower company. The directors have also been charged with extending loans for “criminal intent and falsification of repayment” by a number of borrowers.

The IL&FS management has, in its notice, flagged irregularities and misconduct in transactions in excess of Rs 7,100 crore during the five-year period ending September 2018.

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The notice holds the directors responsible for sanctioning loans aggregating to Rs 2,400 crore by overlooking negative assessment by the credit risk group and ignoring knowledge that the assets of the borrowing entities were stressed.

“The spread at which the loans were sanctioned were either too low or even negative. Thus, you are prima facie responsible for causing huge financial stress and losses to the company by acting in a malafide manner,” said the notice.

It also alleges that directors were responsible for sanctioning loans to the tune of Rs 1,185 crore without any security and loans amounting to Rs 1,922 crore to 16 entitites by overlooking negative assessment.

When contacted, Sharad Goyal, IL&FS spokesperson, declined to comment.

The show-cause notice follows from the interim report submitted by Grant Thornton, which was mandated to conduct a forensic audit of 12 companies including IL&FS Ltd and IFIN, for the review period April 2013 to September 2018. The scope of work included identifying siphoning or misuse of funds, fraudulent transactions, quantifying financial loss suffered and fixing responsibility.

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The 166-page Grant Thornton interim report, dated February 20, 2018, flagged transactions worth around Rs 9,000 crore as being linked to irregularities.