IL&FS case | Loans to Siva Group: SFIO investigating role of Hari Sankaran

Siva Group of companies is a borrower of IL&FS Financial Services Ltd (IFIN) and has defaulted on loan repayment of about Rs 500 crore since 2011, said a source.

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The SFIO has allegedly also found electronic evidence that shows, top officials of IL&FS had personal ties with a few of its defaulting borrowers, said sources.

The Serious Fraud Investigation Office (SFIO) is probing the role of Hari Sankaran, former chairman and managing director of IL&FS, in connection with loans given to Siva Group of companies, promoted by C Sivasankaran, sources told The Indian Express.

Siva Group of companies is a borrower of IL&FS Financial Services Ltd (IFIN) and has defaulted on loan repayment of about Rs 500 crore since 2011, said a source. “Despite the previous default, in February 2018, IFIN extended a loan facility of Rs 175 crore to a Siva Group firm — Siva Shelters and Construction Pvt Ltd and disbursed a loan of Rs 50 crore to the construction company,” the source said.

A November 2018 interim report of the SFIO on the IL&FS Group has pointed out that it has found instances where a loan account of a firm was written off in the books of IFIN as bad debt and fresh loans were advanced to the same company. The report said Siva Shelters is one such borrower of IFIN. Emails sent to Siva Group on April 1, did not elicit any response.

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The SFIO has allegedly also found electronic evidence that shows, top officials of IL&FS had personal ties with a few of its defaulting borrowers, said sources.

The government fraud office on April 1 arrested Sankaran on the grounds of abusing his powers in IFIN, through his fraudulent conduct and in granting loans to entities, which were not creditworthy or have been declared non-performing assets and caused wrongful loss to the company and its creditors. Sankaran will remain in the custody of SFIO till April 4.

The interim report of SFIO said the indebtedness of IL&FS to over Rs 91,000 crore is “deliberate, wilful, fraudulent act of directors who were mind controlling the affairs of IL&FS with intention to defraud creditors, who too had failed in their due diligence”.

The alleged financial irregularities at IL&FS came to light last year after some group entities defaulted on debt repayments.

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In October last year, the government superseded the company’s board to contain the fallout and is now working on a resolution plan.

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