The Serious Fraud Investigation Office (SFIO) arrested former chairman of Infrastructure Leasing & Financial Services (IL&FS) late last night. The former chairman will be in SFIO's custody till April 4. "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," said a Government official.
As per reports, IL&FS Financial Services had borrowings of more than Rs 17,000 crore from debt instruments and bank loans. Multiple agencies are investigating the fraud involving IL&FS. Moreover, the Directorate (ED) carried out searches in multiple locations on February 20 and seized foreign currency amounting to Rs 6 lakh. The searches were conducted at the residential premises of IL&FS' key officials in Mumbai, Delhi and Gurugram.
The ED had also filed a case under Prevention of Money Laundering Act, 2002 (PMLA) against the group on February 19 on the basis of an FIR registered by the Economic Offences Wing (EOW). The FIR was registered for alleged cheating and forgery by the IL&FS group and its managing committee from 2010 to 2018.
"It was alleged in the FIR that the group has taken investments on the basis of false projections and has been involved in forging the books of accounts, in providing loans to subsidiaries, related companies and thereby, layering and routing the funds," the ED had said.
IL&FS that is sitting on a debt pile of around Rs 91,000 crore finances infrastructure projects. Through its 169 subsidiaries, associates and joint venture companies, IL&FS has become a major financer in the infrastructure sector. It also had a high debt-equity of 18.7 per cent in early 2018. Since March 2018, IL&FS has been defaulting in bank loans (including interest), long term and short term deposits and failed to service its Commercial Papers (CP) redemption obligations, which is likely to not only affect thousands of its investors but also major banks and mutual funds associated with the IL&FS group.