Former MD and CEO of IL&FS Financial Services (IFIN), Ramesh Bawa was arrested by the Serious Fraud Investigation Office on Friday night. Bawa was arrested in Delhi late last night. This arrest comes after the Supreme Court refused to extend him protection from being apprehended. Bawa has been arrested under Section 447 of the Companies Act that enables the investigating arm of Ministry of Corporate Affairs to make an arrest for committing fraud.
Earlier this month, the SFIO had arrested the former Chairman Hari Sankaran for fraud. "Hari Sankaran has been arrested on the grounds of abusing his powers in IL&FS Financial Services Ltd. through his fraudulent conduct and in granting loans to entities which were not creditworthy or have been declared Non-Performing Assets and caused wrongful loss to the company and its creditors," a government official had said after Sankaran's arrest.
In a recent press conference, the IL&FS board had said that IFIN has a total exposure of Rs 18,800 crore, of which Rs 10,700 crore is to external companies and the rest to group companies.
The Enforcement Directorate (ED) is also probing the irregularities in IFIN. The ED had earlier registered a case against Bawa, Sankaran, Ravi Parthasarthy, ILFS Rail Ltd and ILF Transportation Networks Ltd on charges of money laundering.
According to the ED, the accused floated shell companies to award work contract. There were vague details provided about these companies. They siphoned off Rs 74 crore and purchased individual assets after which these companies were given a commission of 0.5 per cent of the money routed by them. ED is likely to eventually probe IL&FS and its entire debt burden of Rs 91,000 crore, and not only of its subsidiaries, as mentioned in a report in The Economic Times.