Two former top executives of IL&FS arrested in money laundering case
20 June 2019
The Enforcement Directorate on Wednesday arrested two top executives of debt-laden Infrastructure Leasing and Financial Services (IL&FS) in connection with its probe into financial irregularities, including money laundering.
Arun Kumar Saha, former joint managing director of IL&FS financial services and K Ramachand former managing director of IL&FS transportation network, were arrested on Wednesday evening in Mumbai.
The arrests were made on the basis on a first information report filed before the Economic Offences Wing (EOW) of the Delhi Police in December last year.
A Delhi-based infrastructure firm had filed a case against officials of IL&FS Rail Ltd for allegedly defrauding his company and thereby causing Rs70 crore loss.
The ED is reported to have found that Arun Kumar Saha and K Ramachand were involved in various illegal activities detrimental to the ILFS Group. The two were involved in sanctioning and disbursing loans to financially stressed group companies without proper scrutiny.
They were also reported to have indirectly routed funds from IFIN (the financial unit of ILFS) to ITNL (Transportation Network of ILFS) through contractors of ITNL flouting all norms.
The ED decided to arrest the two as they were not cooperating and were evasive in their responses during questioning. Arun Kumar Saha and K Ramachand, both part of the top management, were influential persons and could influence witnesses and tamper the evidences, the ED felt.
Earlier, on 30 May, the Serious Fraud Investigation Office (SFIO), which was probing several irregularities in IL&FS, had filed charges against several IL&FS officials, including the two, before the special court in Mumbai.
Besides Arun Kumar Saha and K Ramachand, the SFIO had named Ravi Parthasarathy, Hari Sankaran, Ramesh Bawa, among others as accused for various irregularities. The SFIO had earlier arrested RC Bawa and Hari Shankaran, and both are in judicial custody.
The SFIO had accused 30 entities and individuals of various violations and offences, including financial fraud at IL&FS. The SFIO investigation also revealed that the Securities and Exchange Board of India, and auditor Deloitte, failed to check the end use of Non- Convertible Debentures (NCDs) raised by IL&FS Financial Services (IFIN).
IL&FS, which has accumulated a total debt of Rs 91,000 crore, has been trying to sell its assets to repay debt after several defaults
The scam surfaced in July last year when IL&FS started defaulting on its debt repayments due to a severe liquidity crisis. The company borrowed Rs 91,000 crore in various ways, including availing credit from public sector banks.
The government took control of infrastructure financing and construction group in October last year, and overhauled its management in the wake of the allegations.
Since then, the ministry of corporate affairs had moved the National Company Law Tribunal against IL&FS in September last year and recently sought to bar Deloitte Haskins & Sells and BSR & Associates Llp from audit practice for five years for their alleged involvement in the financial mismanagement at IL&FS Group.