July 22, 2019

IL&FS Looks For New Law Firm After Top Official Complains About Conflict Of Interest To Ministry Of Corporate Affairs

[ By Bobby Anthony ]


IL&FS has begun looking for another law firm after a top IL&FS official sent a complaint to the Ministry of Corporate Affairs alleging “strong” conflict of interest in Cyril Amarchand Mangaldas (CAM)’s association with the crisis-ridden company as its legal adviser.

CAM was legal adviser to the former board of IL&FS, which is facing criminal and legal action by government agencies, and continues to perform that role for the new board too, the complaint alleged.

The complaint also alleged that IL&FS officials feel that speaking about conflict of interest issues of CAM would “upset” Uday Kotak, chairman of the new IL&FS board, because of his “longstanding business relationship” with CAM.

The complaint alleged CAM had been giving off-the-record legal advice to IL&FS Transportation Networks India Ltd (ITNL) during its extreme liquidity crisis in mid-2018.

It alleged that despite knowing about the crisis at ITNL, a listed entity, the law firm did not advice the company to disclose these issues to SEBI, the capital markets regulator.

To validate its claims, the complaint cited an email found during the forensic audit of ITNL, purportedly written by Ravi Parthasarathy, former chairman of IL&FS, to a few top officials of the ITNL, IL&FS Financial Services (IFIN) and IL&FS.

Parthasarthy’s email of May 21, 2018, pertained to the liquidity crisis at ITNL and allegedly stated that he discussed the issues of ITNL with Cyril Shroff and a top official of an audit firm.

The new IL&FS board has shortlisted four separate law firms for the position and is likely to conduct interviews this week, after ministry’s directive to look into the issue.

The board of IL&FS may also discuss the appointment of a new legal advisor in its board meeting on July 24.

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