Indian Financial Group IIFL Fights Wirecard Fraud Claim in London Court
Indian financial group- India Infoline Limited Wealth (IIFL) has prayed before the London’s High Court to overturn its claim that it had some responsibility for an alleged fraud connected to the largest takeover of a payment processing firm by the failed payment giant Wirecard.
IIFL is India's largest diversified financial services company, and its headquarters is in Mumbai.
The litigation dates back to a series of 2015 in which Amit Shah, co-founder of IIFL Wealth, allegedly arranged for an investment fund to buy an Indian business called Hermes for €36mn and thereafter sold it to Wirecard weeks later for €326mn.
In June 2020, Wirecard collapsed due to an accounting fraud involving more than a billion dollars. After the English court in a related proceedings decided a month later that it was the ‘inherent probability’ that the payments group did not know how much Hermes was sold for to the Mauritius fund, Wirecard is not a party to the claim.
In 2017, minority shareholders filed a suit against Shah, an IIFL Wealth UK subsidiary, and two Indian brothers who were the majority owners of Hermes before the ‘flip.’ The brothers failed in an attempt to have jurisdiction in the case moved to India.
Rajesh Pillai, KC, acting for IIFL said “the claimants are sophisticated commercial investors who could have investigated and then pleaded the essential facts” shortly after they became aware of the sale of Hermes to Wirecard in late November 2015.
Anna Dilnot, KC, representing the minority shareholders, described the arguments as circular “from the mouth of the fraudster.” She said in her statement, “there were lies, and there were express lies, and they left my clients with nowhere to go.”
In Shah’s defense to the 2017 lawsuit, he had claimed that IIFL had no relationship to the Mauritius fund, known as ‘EMIF.’ Since then, he has left IIFL and has separate representation.
In a subsequent amended defense, he said that he established EMIF with employees of IIFL and as an officer of IIFL. The claimants said that it was new information discovered from 2019 onwards in the Wirecard proceedings that allowed them to bring the claim against IIFL. “You can’t allege Amit has been dishonest until you know the role of EMIF,” their counsel said.
According to Rajesh Pillai said that with respect to the allegation that ‘IIFL is EMIF’ it was denied, and it is an incredibly broad-brush claim, that would be properly addressed if the case proceeded.
He added that, “Mr. Shah is not here to argue his claim,” but that the arguments for fraud were disputed and denied.
The judge, Simon Rainey, KC, said to expect his ruling in due course.