A recent Enforcement Directorate remand application submitted to a special court in Mumbai has alleged that IL&FS Financial Services (IFIN), which is a subsidiary of the IL&FS Group, has laundered more than Rs 5,000 crore of shareholder funds.
The ED remand application has claimed that the IL&FS Group was run as a “personal fiefdom” by its directors, who had allegedly indulged in enhancing turnover to ensure better credit rating for group companies as well as bonus-like incentives.
Incidentally, the ED filed its remand application a day after arresting IL&FS's former joint managing director Arun Saha and former managing director of IL&FS Transportation Networks Ramachand Karunakaran.
The ED recently arrested both of them under relevant sections of the Indian Penal Code and the Prevention of Money Laundering Act. Both of them have been remanded to ED custody.
According to the ED remand application, the total debt of IL&FS has inflated to Rs 91,000 crore due to “arbitrary sanctioning of loans or credit facilities, including routing of money through third-parties”.
The remand application stated that it is suspected that there has been laundering of more than Rs 5,000 crore of IFIN shareholders money.
Allegedly, the committee of directors had created a “complex system” to show “artificially enhanced turnover’ and to show inflated profit to attract capital from gullible parties in order to maintain a high credit rating, the remand application stated.
The remand application stated that there was a complex web of 232 companies in the IL&FS Group.
Allegedly, a management board consisting of the arrested duo— IL&FS's former joint managing director Arun Saha and former managing director of IL&FS Transportation Networks Ramachand Karunakaran—as well as other officials including R Parathasarthy, Ramesh Bawa, Hari Sankaran, Vibhav Kapoor and Shahzaad Dalal had full oversight about all critical issues including financing and strategy for the entire group, the remand application stated.