IL&FS ‘gifts’ for key rating officials: Deal on villa, Fitbit watch and football tickets

According to the Thornton report, in one of the emails exchanged during September 2012 to August 2016, it appeared that then MD and CEO of IL&FS Financial Service Limited (IFIN), Ramesh Bawa, had facilitated purchase of a villa worth Rs 3.12 crore for Jyotsna Srivastava, wife of Ambreesh Srivastava (head of Financial Institutions—South and Southeast Asia, Fitch Ratings). Bawa had also apparently helped them obtain discount of about Rs 43 lakh on purchase of the villa and requested Unitech Ltd’s MD Ajay Chandra to personally get involved and resolve the issue that Jyotsna Srivastava was facing with regard to interest charged on delayed payments for the villa.

Also, D Ravishankar (founder and director, Brickwork Ratings), in an email dated April 21, 2015, to IL&FS joint managing director and CEO, Arun Saha, thanked him for arranging tickets for a football match at Madrid in the IL&FS corporate box. “This email suggests potential favours which are arranged for the key officials of credit rating agency (CRA) by one of the former IL&FS management personnel,” the report said.

The interim forensic audit report also found that an email dated February 20, 2008, sent by Meenakshi Kanagat (manager, IL&FS Ltd) to then IL&FS chairman Ravi Parthasarthy, indicates donation of Rs 25 lakh to be given to a trust of which a former ICRA chairman was a managing trustee, the report said.

A Fitbit watch was stated as one of the favourites of an official of CARE in one of the email exchanges cited in the Thornton report. Saha and IL&FS chief credit and risk officer Sujoy Das were planning to provide a Fitbit watch as a gift to Rajesh Mokashi, managing director of CARE, in one of the emails dated September 17, 2013, cited in the report.

In an email dated August 29, 2016, which was sent by Lalita Jagtiani (employee, IL&FS) to Melita Pereira (employee, IL&FS), it appears that IL&FS had provided gifts in the form of shirts to various key managerial personnel of IL&FS as well as Ambreesh Srivastava, managing director, Fitch, “indicating potential close relationships between IL&FS and the CRA management team”, the report said.

It has been seen several times that when the rating was not favourable, IL&FS senior management would fix a meeting with the head of the agency and later it is found that the initial rating was changed. “We noted instances where after meeting with the then key employees of IL&FS, CRA would not downgrade the ratings which it initially decided,” said the report.

While these are some of the alleged favours that top executives of rating agencies took from IL&FS, the email exchanges in the report hint at possible quid pro quo. IL&FS group companies continued to get high ratings even as the rating agencies identified multiple issues with regard to operations of the companies.

“It was noted that although Credit Rating Agencies had concerns/issues with the operations of the IL&FS group (including potential stress and liquidity indicators) during the period June 2012 to June 2018, the ratings assigned by them were consistently high and the same were reversed/downgraded only post June /July 2018,” said the Thornton report. It points that there were instances where in case if the then key employees of IL&FS did not receive the desired rating from the CRA they used to potentially pressurise rating agencies to either withdraw the credit ratings or credit rating request or approach other rating agencies who would provide the desired ratings.

A spokesperson for Brickworks said that “on the specific instance of alleged favours taken by Mr D Ravishankar, a detailed response on the same has been shared with the new management at IL&FS Ltd”.