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Skeletons In The Closet

Dipak Mondal     June 11, 2019

The charge sheet filed by the Serious Fraud Investigation Office (SFIO) in the IL&FS default case points to a criminal conspiracy by the top management to hide the worsening financial health of the company as well as its many subsidiaries and delay the inevitable (the series of defaults) through a web of unscrupulous transactions.

The charge sheet enlists a number of violations, which include hiding the real picture of the company's financial health, non-compliance with norms on loans to group companies, non-maintenance of capital adequacy requirements, non-disclosure of directors' interest in borrowing companies and use of vendors to reroute money to subsidiaries. All these activities were carried out at the connivance of the top management and the statutory auditors, it says. The charge-sheet also admonishes the auditors for knowingly looking away while these crimes were being committed.

While the SFIO investigation suggests it has enough evidence to nail the top management and auditors of IL&FS, it is to be seen if these allegations pass the legal test in court.


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