IL&FS fraud case: ED searches homes, business premises of 4 industrialists

Rishi Agarwal of ABG conglomerate, C Sivasankaran of Siva Industries, Nikhil Gandhi of SKIL Infrastructure, and Viren Ahuja, promoter of Flemingo Geowork were searched by the ED

Continuing its crackdown on those involved in the Infrastructure Leasing & Financial Services (IL&FS) fiasco, the Enforcement Directorate (ED) has searched homes and business premises of at least four industrialists for alleged irregularities in loans taken by them from a financial subsidiary of the beleaguered company.  

Rishi Agarwal, promoter of ABG conglomerate, C Sivasankaran of Siva Industries, Nikhil Gandhi, executive chairman of SKIL Infrastructure, and Viren Ahuja, promoter of Flemingo Geowork were searched by the ED.

The search operation was conducted at multiple locations, including Mumbai, Delhi and Chennai, at the residences and on the business premises of these four. The probe agency is learnt to have seized several properties, documents and papers in connection with the probe.

Sources said that the ED has found that loans had been extended to the ABG group without following the due diligence. “We are probing around 10 loan accounts of this company which were used to service earlier debts, so that these don't turn non-performing assets,” said an official privy to the development. According to him, this was part of the evergreening exercise by the company and some of these loans were used to pay the dues. 

IL&FS Financial Services (IFIN) had extended credit facilities to the ABG group to the tune of over Rs 1,000 crore since 2010. The amount was classified as NPA in September 2018.

In Ahuja’s case, a loan of over Rs 500 crore was given to Flemingo Geowork’s infra project, of which about Rs 9 crore had gone to Ahuja’s account, according to the sources. Erstwhile promoter of SKIL is also among one of the borrowers who came under the agency's scanner. 

Sivasankaran allegedly connived with the management of the IFIN and received wrongful gain in the form of loan with an intention to not repay the same. The Serious Fraud Investigation Office (SFIO) investigating the matter. “That connivance between Sivasankaran and IFIN officials is also proved from the mail on January 1, 2012 in which Sivasankaran asked Ravi Parthasarthy (chairman IL&FS group) to discuss the issue concerning Ackruti, Unitech and L&T, which establishes that companies of Siva groups were getting wrongful gains from IFIN and Sivasankaran with connivance of the top management injured the interest of IFIN,” the SFIO chargesheet said.

The SFIO charegesheet includes several instances where the director of a borrower entity at some point was on the board of IL&FS. Such loans were later transferred to the account of these directors.

Meanwhile, the new board of IL&FS is learnt to have sent notices to all the former directors of the firm and had sought their response. 

The ED is examining the charges against the audit firm in the SFIO prosecution complaint. “We are currently looking at all aspects that led to fraud in the company. The agency will examine the role of auditors in the proceeds of crime and the complex structure allegedly created so that a fund could be easily siphoned off,” said the official.

Last month, enforcement sleuths had arrested two former executives of IL&FS group firms under the Prevention of Money Laundering Act.

Sources said the ED suspects proceeds of the crime to be over Rs 13,000 crore, involving several overseas deals. The sources added the ED is probing instances of end-utilisation of loans, including money lent to borrowers of IFIN. There is evidence showing that advances were given to entities linked with senior executives of IL&FS and IFIN.

The ED is examining whether the falsification conducted by the auditors caused loss to the company and how much of it was being diverted. The ED’s case is based on an FIR filed before the economic offences wing of the Delhi Police in December last year.