Money & Banking

14 ex-directors of IL&FS arm face money laundering charges

Our Bureau/Agencies New Delhi | Updated on March 05, 2019 Published on March 05, 2019

The notices follow an extensive special audit ordered by the new board and conducted by Grant Thornton of crisis-hit IL&FS Group. File photo   -  REUTERS

IL&FS Group, which operates at least 24 direct subsidiaries, 135 indirect subsidiaries, six joint ventures and four associate companies, is sitting on debt of Rs 94,000 crore

The new government-appointed board of IL&FS has charged 14 former directors of group firm IL&FS Financial Services Ltd (IFIN) of facilitating money laundering, sanctioning loans in violation of rules and causing “huge financial stress and losses” to the company. Issuing show-cause notices to the 14 former directors, it has sought explanation on the findings of an audit report by Grant Thornton.

The audit report had found serious lapses in the manner in which huge loans were extended to certain entities even after internal risk assessment clearly showed that the borrowers were under financial stress.

The notices follow an extensive special audit ordered by the new board and conducted by Grant Thornton.

Negative spread

According to the report, various instances were found wherein the committee of directors of the infrastructure financing company extended loans at a negative spread to borrowers facing liquidity issues. The quantum of such loans is pegged at over ₹4,300 crore.

Another 16 instances with a cumulative loan amount of ₹1,922 crore were found wherein the directors sanctioned loans at a negative spread or limited spread for those companies that clearly were under stress. “Unapproved board minutes appear to suggest that the board of directors were potentially aware that the loans provided to third parties were further forwarded/lent to IL&FS group companies,” stated the report seen by BusinessLine. Overall, the directors have been blamed for various financial irregularities in deals with financial implications of over ₹13,000 crore.

Stern action

Officials said no reply has been received from any of the 14 former board members, and the board is set to follow up the notices with stern action, which may include filing of cases.

The IL&FS Group is under debt of ₹94,000 crore and has reported multiple defaults over the past six months. This forced the government to appoint a new board under the chairmanship of Uday Kotak.



Published on March 05, 2019

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