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IL&FS crisis: Board gives nod to digital forensic probes amid massive layoffs, shell firm closures

Two digital forensic investigations will reportedly be conducted by the SFIO along with a private investigator to comb through the company servers as well as the desktops, laptops, tablets and mobile phones of senior company officials to ferret out what led to the crisis at the infrastructure financing giant

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IL&FS crisis: Board gives nod to digital forensic probes amid massive layoffs, shell firm closures
The Group is sitting on a debt pile of over Rs 99,358 crore as of last September

The Serious Fraud Investigation Office (SFIO), which has been probing the debt-ridden Infrastructure Leasing and Financial Services (IL&FS) since last October, is now turning to cyber forensics to ferret out proof of wrongdoing on the part of the senior executives that caused the crisis at the crippled behemoth and its numerous subsidiaries. Cyber forensics is the process of recovery and interpretation of data found in digital devices in a manner that can be presented in a court of law.

Sources in the know told The Economic Times that the IL&FS board has already initiated such an investigation and is looking to rope in an expert investigator in the coming week. They added that SFIO needs more information about certain aspects and decisions taken by some executives of IL&FS and its subsidiaries. For instance, the final forensic audit report on IL&FS submitted by Grant Thornton recently had found 107 instances of loan evergreening worth Rs 10,264 crore apart from a host of other irregularities.

To that end, two digital forensic investigations will reportedly be conducted to comb through the company servers as well as the desktops, laptops, tablets and mobile phones of the company officials. In fact, about 25 desktop servers and laptops are already in possession of SFIO and evidence is being collected. The probes are also expected to look into communication between senior executives on social media platforms, seeking any patterns that could be of help with the case.

Significantly, independent directors of various IL&FS companies, auditors, credit rating agencies and former officials are also under the scanner of the corporate affairs ministry for alleged lapses in carrying out their duties as financial problems continued to brew at the diversified group.

Meanwhile, the infrastructure financing giant has reportedly shuttered 45 of its group firms that were allegedly used to round-trip loans and funds, of which 42 were registered overseas. "There were 347 companies in total [previously]. The number has come down to 302. The rest of the firms have been closed down," a source told Mint, explaining that these were shell companies used for round-tripping loans and funds.

The Group, sitting on a debt pile of over Rs 99,358 crore as of last September, is also seeing a lot of layoffs. The buzz is that IL&FS' permanent staff has come down from 5,000 to 2,500 while the contractual staff has shrunk over 11% to 8,000 currently.

"The new board has taken various initiatives towards rationalised manpower with a view to reduce costs associated therewith," an IL&FS spokesperson told the daily, adding that the exercise will be conducted in two phases. The first phase focussing on  initiatives such as salary rationalisation and separation of superannuated consultants - which is expected to result in net savings of Rs 100 crore annually - has already been executed. "Phase II initiatives including talent restructuring, amalgamation of roles and responsibilities are under process. These steps will yield an approximately 50% savings in the wage bill of the IL&FS Group. Several other initiatives are being initiated and that will bring down total manpower of the IL&FS Group by approximately 65% and wage cost by 50%, respectively," the spokesperson added.

With PTI inputs

Also read: IL&FS board mulls option to call back bonuses paid to ex-directors: report

Also read: Slowdown Blues: Imminent crisis in NBFC sector, says corporate affairs secretary

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