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Enforcement Directorate files first chargesheet in IL&FS case

The headquarters of Infrastructure Leasing and Financial Services Ltd in Mumbai. Mutual funds with exposure to troubled groups such as IL&FS Group are likely to face issues when it becomes necessary for their FMP or debt scheme to repay the investors at maturity. Photo for representation only. Reuters/File

The Enforcement Directorate (ED) on Friday filed its first prosecution complaint (chargesheet) in connection with its probe into the collapse of IL&FS in a special court in Mumbai under the Prevention of Money Laundering Act (PMLA).

While the court is yet to take cognizance of ED s complaint, the agency has provisionally attached immovable properties worth Rs 570 crore of Ravi Parthasarathy former chairman of IL&FS, its vice chairman Hari Sankaran, Ramesh Bawa, former CEO of IL&FS Financial Services (IFIN), Arun K Saha, former joint managing director of IFIN, K Ramchand, former managing director of IL&FS Transportation Network, (ITNL), and Siva Group s C Sivasankaran in Chennai, Bangalore, Delhi and Mumbai.

The ED complaint said that in March 2018, the directors of IFIN disbursed loans of about Rs 2,270 crore to third parties for financing its group firm ITNL. This was done to bypass the November 2017 direction of the Reserve Bank of India (RBI) that stopped IFIN from lending to its Group companies.

The ED has termed this routing of money to ITNL as proceeds of crime under PMLA. The so-called third parties allegedly used to route the money to ITNL for a small commission.

ED s complaint also said that the committee of directors (CoD) of IL&FS siphoned money from the IL&FS employee welfare trust (EWT) in garb of distribution of shares of IL&FS and other group concerns and also sale of shares and distribution of profits to the employees .

All this was done despite the fact that the trust was running in operational losses, said the ED complaint. The agency, in its complaint has also detailed several transactions between Sivasankaran and the IL&FS Group firms which were allegedly in violation of norms.

Earlier on June 19, ED had arrested Saha and Ramchand in connection with it money laundering investigation. The two officials are currently in judicial custody. The ED has alleged that more than Rs 5,000 crore of shareholders money has been laundered by IFIN, the non banking financial company of IL&FS Group.

The IL&FS Group that has total liabilities of Rs 91,000 crore has also come under the scanner of the Serious Fraud Investigation Office (SFIO). The SFIO has found several irregularities across corporate governance and financial parameters that led to a default crisis at IL&FS. The alleged financial irregularities at IL&FS came to light last September, after some group entities started defaulting on debt repayments. The entire group has been defaulting on repayments since then. The government subsequently superseded the company s board, and appointed a new management to work on a resolution plan.