The Serious Fraud Investigation Office (SFIO) on Friday has filed its first chargesheet in the Infrastructure Leasing & Financial Services (IL&FS) case. The chargesheet names a total of 30 individuals and entities including businessman C Sivasankaran and 9 other directors of IL&FS Financial Services.
The chargesheet has also auditors BSR & Co LLP and Deloitte Haskins & Sells (DHS) LLP along with others of concealing information and falsifying accounts.
The IL&FS crisis started in September 2018, when the group of companies had defaulted on its debt obligations forcing the government to take over and replace its board with its own nominees. Here is a low list of the charges levelled by SFIO in its chargesheet
Former Directors of IL&FS & IL&FS Financial Services
SFIO in its chargesheet has levelled charges of cheating and criminal conspiracy against some former senior executive of IL&FS and IL&FS Financial Services (IFIN).
IFIN extended loans to companies of Siva, ABG, A2Z, Parsvnath group and other companies, said the SFIO in its 840-page chargesheet, which CNBC-TV18 has seen.
"A number of these borrowers were not servicing their debt obligation. The top management was aware of the potential problematic accounts which were getting stressed in the succeeding month from the reports generated through the Management Information System (MIS) of IFIN."
Ravi Parthasarathy and Hari Sankaran used IL&FS group as their personal fiefdom, SFIO alleged, "The management of IFIN adopted fraudulent practices in order not to let aforesaid loan be classified as NPA. They started lending to other companies belonging to the borrowers for repaying the principal and/or interest of the aforesaid defaulting borrowers."
C Sivasankaran and Siva Group
SFIO alleged C Sivasankaran connived with top management of IL&FS group and received wrongful gains. The enforcement agency also alleged that C Sivasankaran connived to get a loan from IFIN without intention to repay.
"In 2014, while lending to Siva India Commercial Traders Pvt Ltd, additional security in the form of stock of Emerald Stone valued at Rs 59.26 crore was taken," the charge-sheet alleged.
"As on March 31, 2015, the aggregate exposure to Siva Group companies stood at Rs 182.45 crore. The said exposure continued as a loan from March 2015 to December 2015, with no security cover as so-called security of Emerald stock was existing only on paper without any physical verification."
The SFIO in its chargesheet mentioned emails directing IFIN employees not to securitise outstanding dues while entering into a fresh lending exercise with the Siva group companies.
The chargesheet in this matter said, "It was observed from an email from Parthasarathy to Sivasankaran that instead of protecting the interest of the company, Parthasarthy is found being apologetic to Sivasankaran for taking time for finalising the loan transaction of Rs 175 crore."
SFIO also alleged that Siva group companies made the repayment in only 4 transactions out of 15 transactions when loans were extended by IL&FS Financial Services.
Also, SFIO added that the primary security for the loans advanced to Siva group companies from December 2011 to December 2014 were shares held by Siva group companies in Tata Teleservices or TTSL.
The shares were carried over for subsequent fresh lending till 2014. The shares which were valued at Rs 82 per share. No revaluation of the shares led to a drastic reduction in security cover of such lending.
The firms BSR and Co and Deloitte Haskin and Sells have also been charged with concealing of information by not raising red flags on the misstatements in the accounts of IL&FS Group companies.
In its chargesheet, SFIO said the auditors colluded with the coterie to conceal material information and in fraudulently falsified the books of accounts and thereby financial statements from 14 to 18. Auditors did not report the correct state of affairs on Net Owned Funds and CRAR.
Further, SFIO said that the auditors did not follow practices to bring out the true and fair picture of the accounts and allegedly colluded with management to conceal alleged fraudulent practices.Calling the independent directors “mute spectators,” the SFIO said they ignored all warnings and failed to serve the interest of the company and its stakeholders by not raising the issue in board meetings.