Several top-ranking multinational companies had invested their provident and pension funds in the now toxic bonds of Infrastructure Leasing and Financial Services (ILFS) putting the hard-earned money of these firms' employees at risk, reports suggest. A supplementary affidavit filed by the Ministry of Corporate Affairs (MCA) before the National Company Law Appellate Tribunal (NCLAT) earlier this week showed that as many as 1,400 firms have a total exposure of Rs 9,700 crore in the toxic IL&FS bonds, a report by news agency IANS said. This corpus of funds comes from lakhs of employee provident and pension funds from these companies.
The MCA affidavit filed on April 8 shows major investment banks, tech companies, pharmaceutical firms and airlines embroiled in the IL&FS toxic bond pandemic. The names include Bata India employees statutory PF, Glaxo India, Otis Elevator, Sumitomo Indian Staff PF, McCann Erickson India EPF, Lufthansa German Airlines employees local PF, BASF, Novartis, Pernod Ricard, Bechtel India, JP Morgan, Nestle, Texas Instruments India, Volvo India, Cisco Systems India, Sanofi India, Sapient Consulting, BBC Worldwide India, McKinsey Knowledge Centre and Shell India, IANS reported.
The long list of investors also includes names like the Canadian High Commission India Staff, American Embassy School PF, Barclays Bank Plc India, American Express India, Societe Generale EPF, British Airways, Philips, Alcatel Lucent, Mercedes Benz R&D India, Procter & Gamble Executive Pension Plan, Adobe Systems, HP Globalsoft, Schlumberger, CapGemini, Cadbury India, Goodricke Group, Gillette.
Many of the companies have multiple exposures, the report said. Otis has several entries with amounts varying from Rs 55 lakh to Rs 2 crore over different years, the IANS report said. The list compiled by MCA reflects the status December 31, 2018. Worryingly, the MNCs and their employees fall under the category of unsecured creditors, and their investments are completely unprotected due to the level of toxicity.
There has been no initiative to start a repayment process against the exposure of these MNCs, apart from the April 8 order by NCLAT which called for prioritising the provident and pension funds stuck in the IL&FS bonds.
"Provident fund and pension fund have nothing to do with this, this is not your money, it is related to the employees. We want that it should be released first," a two-member NCLAT bench headed by Justice S J Mukhopadhaya had said earlier this week.
However, the government does not want any preferential treatment for provident and pension funds as it is likely to upset other creditors, the report said.
Meanwhile, the Serious Fraud Investigation Office (SFIO) arrested former MD and CEO of IL&FS Financial Services (IFIN) Ramesh Bawa on charges of fraud. The action against Bawa came after the Supreme Court refused to extend him protection from being apprehended.