June 12, 2021 1:30:48 am
Former non-executive chairman of Infrastructure Leasing & Financial Services (IL&FS) Ravi Parthasarathy was arrested in Chennai on Friday by the Economic Offences Wing (EOW)-II. A statement from EOW-II said he was arrested in a case registered in September last year, while calling him a “kingpin and the mastermind of several crore IL&FS and ITNL financial scam”.
“The IL&FS group, which consists of over 300 group companies, was used as a vehicle to perpetrate one of independent India’s largest financial frauds by the management of IL&FS group, which was headed by the then chairman and the CEO, Ravi Parthasarathy,” the statement said.
The FIR was registered as per The Tamil Nadu Protection of Interest of Depositors (TNPID) Act, 1997 – which has powers to take action against financial institutions that fail to return the deposit and interest – on a complaint by 63 Moons Technologies Ltd, which claimed to have lost a sum of Rs 200 crore. The statement added the EOW-II had also received complaints from other depositors too.
Earlier, the anticipatory bail petition filed by Parthasarathy was dismissed by the Madras High Court. Hari Sankaran and Ramachand Karunakaran, former directors and managing directors of the company and “close aides” of Parthasarathy, were already arrested by EOW-II.
After he was produced before a TNPID court in Chennai, Parthasarathy was remanded to judicial custody.
On July 20, 2018, Parthasarathy resigned as non-executive chairman of IL&FS, the holding company of the IL&FS group which he served for over 30 years. Parthasarathy, an alumnus of IIM Ahmedabad and co-founder of finance firm 20th Century Finance, joined the IL&FS in 1987 as president & chief executive officer and was appointed as managing director in 1989. Known in the corporate world for his deal-making skills, he was later designated executive chairman of the company. The overleveraged company which executed some of the leading infrastructure projects under the leadership of Parthasarathy, collapsed under a pile of debt.
On October 1, 2018, the government had moved the NCLT to supersede the board of IL&FS, which had defaulted on repayments to creditors. IL&FS owed lenders a whopping Rs 94,000 crore and has defaulted on several of its commitments. Rating agencies failed to spot the firm’s fragile finances, down-grading the company to junk status in a matter of weeks.
The new board of IL&FS, led by Uday Kotak, discovered there was a complex web of over 250 companies which were part of the overall IL&FS group, which has an outstanding of over Rs 94,000 crore to lenders. Over 90 per cent of the flagship company’s assets are classified as dud investments.
In February 2019, the Enforcement Directorate registered a case against the IL&FS top officials including Parthasarathy, under the Prevention of Money Laundering Act (PMLA) and carried out raids across multiple locations.
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