The Serious Fraud Investigation Office’s (SFIO) probes have revealed that the former officials of IL&FS had amassed multiple immovable properties and crores of movable properties. Former chairman Ravi Parthasarathy has declared Rs 98.98 crore of movable properties during the interrogation by the SFIO, besides four immovable ones.
Hari Sankaram, former vice chairman, has declared Rs 19.04 crore of movable properties and three immovable properties while Arun Saha, the former joint MD, has declared Rs 59.49 crore movable properties and nine immovable ones.
Vibhav Kapoor, the former chief investment officer, has declared Rs 22.47 crore movable properties besides two immovable ones while Ramesh Bawa, former MD, IL&FS Financial Services, has shown Rs 32.72 crore movable properties, besides five immovable ones. K Ramchand, MD, IL&FS Transportation Networks (ITNL), has declared four immovable properties.
The SFIO report reveals that a few officials from the board of directors also used the Employee Welfare Trust (EWT) as a tool to enrich themselves at the cost of IL&FS Group companies. While the objective of the trust was to cater to the welfare needs of the employees, it was instead made a vehicle to invest in the securities of IL&FS and its group companies with loans obtained from the company itself.
The shares were then distributed at a very nominal price to select management personnel of the group or sold to a third party from which the proceeds were again distributed to selected management personnel.
Moreover, the indenture of the trust had been amended six times till date since its incorporation in 1990.
The SFIO notes that the fifth and sixth amendments were particularly damaging to the welfare of the broader employee base as its findings highlight a “fraudulent and irresponsible conduct of key managerial and executive personnel” who were using the EWT as a vehicle for their personal attachment.
The fifth amendment was made to give powers to the trustees to sell any portion of the trust investments either by public auction or by private contract for such consideration and on such terms and conditions relating to title or otherwise in all respects as the trustees may in their absolute discretion think fit and proper, without being answerable for any loss occasioned thereby.
This was approved by a committee of directors comprising Parthasarathy, Sankaran and Saha who were also the trustees of the EWT at that point of time. There was a conflict of interest on the part of the committee of directors and the trustees as the same persons occupied both offices.
According to the SFIO report, the fifth amendment to the trust deed was instituted fraudulently.