IL&FS money laundering case: Enforcement Directorate files 1st chargesheet

The prosecution complaint was filed in a special court of the Prevention of Money Laundering Act, charging former senior management personnel of IL&FS along with Aircel founder C Sivasankaran

The Enforcement Directorate (ED) on Friday filed its first prosecution complaint, commonly known as charge sheet, in the Infrastructure Leasing & Financial Services (IL&FS) money laundering case.

The prosecution complaint was filed in a special court of the Prevention of Money Laundering Act (PMLA), charging former senior management personnel of IL&FS — Ravi Parthasarathy, Ramesh Bawa, Hari Sankaran, Arun Saha, and Ramchand Karunakaran — along with Aircel founder C Sivasankaran.

The ED has also made provisional attachment of bank accounts and immovable property held by these people to the tune of Rs 570 crore.

The enforcement agency, in the charge sheet, is learnt to have highlighted the modus operandi of the senior management personnel, who were indulging in various commissions and omissions, thus leading to illegal personal gains at the expense of the company.

“In criminal conspiracy with each other and promoters of various private entities, they have — in flagrant violations to the prudent and established norms — sanctioned and disbursed huge loans to companies that were already under financial stress and had defaulted on repayment of earlier loans taken from IL&FS Financial Services (IFIN),” said the ED.

The charge sheet pointed out that the senior management had falsified the accounts and had indulged in circuitous transactions. This was done ostensibly to maintain the credentials of IFIN, in order to continue receiving high remuneration and to artificially boost the balance sheet of IL&FS group. However, these illegal activities led to further losses.

The ED found that the senior management was involved in criminal conspiracy with Sivasankaran and had fraudulently financed various companies of Siva Group, of which Rs 494 crore remained outstanding.

Citing the result of its investigation, the probe agency added that though IFIN’s financials showed a negative trend between FY16 and FY18, the performance-related pay, deputation cost, and commission received by members of the senior management showed a substantial rise.

It was also discovered that shares of IL&FS were transferred to the Employee Welfare Trust (EWT) at a very concessional rate. The EWT then sold these shares to various entities outside the group at a huge premium, and later distributed proceeds from the sale to employees. A larger chunk of the same went to the senior management.

This was despite the huge operational losses faced by the Trust, noted the ED.

In June, ED arrested Arun Saha and Karunakaran Ramchand. While Saha was joint MD and CEO of IL&FS, Ramchand was MD of IL&FS Transportation Networks.

People in the know added that the ED will also file its supplementary charge sheet in the case.