The Mumbai sessions court on Friday admitted the criminal complaint filed by Serious Fraud Investigation Office (SFIO) against IL&FS Financial Services (IFIN), and 29 other entities and individuals, which include IFIN’s former directors, auditors, C Sivasankaran and his group and various other people.
The court will take cognizance of the matter and issue notices to the accused named in the complaint. The matter has been posted for hearing on June 18.
Two of the accused named in the list, former IL&FS vice-chairman Hari Sankaran and IFIN managing director and CEO Ramesh Bawa are presently in judicial custody in Mumbai Central Jail.
The SFIO in its complaint alleged that former IL&FS chairman Ravi Parthasarathy, Sankaran, Bawa, and executives Arun Saha, Vibhav Kapoor and K Ramchand, who controlled the affairs of IFIN, knowingly gave loans to Sivasankaran (Siva), A2Z and Pasvanth group, even as these companies were not servicing their debt obligations.
The complaint also alleged that the independent directors and the chief financial officer of the company ignored all the alarming indicators and failed to save the interest of the company and its stakeholders.
Moreover, the SFIO complaint alleged that the auditors connived with the IFIN management to conceal material information and fraudulently falsified accounts of IFIN to make it look good.
Investigations conducted by SFIO revealed that the audit committee members, independent directors, IFIN CFO and group IL&FS CFO were aware of IFIN’s stressed asset portfolio but they kept on lending money to the group companies of existing defaulting borrowers to prevent them from being classified as non-performing assets.
These people were aware of the many RBI reports and stood mute spectators of the management decisions and overlooked the various impairment indicators in contravention of the accounting standards.