The financial irregularities in the books of IL&FS came into scrutiny last year, after the company failed to fulfil short-term and long-term debt obligations to the tune of Rs 91,000 crore.
By Anwesha Ganguly
The Enforcement Directorate (ED), which is investigating the affairs of IL&FS group, is likely to question Ramesh Bawa, former managing director and CEO, IL&FS Financial Services (IFIN) and Hari Sankaran, former vice president, IL&FS this week, sources told FE. The ED’s probe found evidence that, besides routing funds through third party vendors, the former top brass used at least four shell entities to siphon out funds, an official aware of the development told FE.
“The ED has uncovered suspicious fund movements involving four-five identified shell companies, there may be more. Bawa and Sankaran will be questioned for details,” the official said, adding that it is too early to ascertain the total quantum involved at this stage.
The financial irregularities in the books of IL&FS came into scrutiny last year, after the company failed to fulfil short-term and long-term debt obligations to the tune of Rs 91,000 crore. Apart from the ED, the SFIO is also working on a detailed report focusing on the transactions of IFIN and ITNL. Based on a chargesheet filed by the Serious Fraud Investigation Office (SFIO) in May and a complaint lodged by Economic Offences Wing, the ED initiated a probe into the affairs of IFIN and IL&FS Transport Networks (ITNL) for violations under the Prevention of Money Laundering Act.
The ED has already questioned five third-party vendors of IL&FS for their role in the fraud. Another four will be summoned this month, the official said. The finance ministry’s money laundering probe agency has also recorded statements from Arun Saha and K Ramchand, who were arrested by the ED in June, regarding their role in the fraud.
Earlier this month, representatives of ICRA and CARE Ratings were summoned for questioning. The ED found that rating agencies did not do their due diligence, and failed to independently verify information provided by the company while assigning ratings to IL&FS instruments, the official added. The ED had already questioned partners of audit firms Deloitte Haskin & Sells and BSR & Associates in the matter. The two audit firms are facing a potential five-year ban from auditing activities for their alleged involvement in the IL&FS fraud. FE earlier reported that the ED expects to submit its report by August end.