IL&FS waives off confidentiality clause with Cyril Amarchand Mangaldas to accelerate probe

Infrastructure Leasing & Financial Services Limited (IL&FS) board has waived a off confidentiality clause that had prevented Cyril Amarchand Mangaldas (CAM) from sharing all the details of its engagement with the previous management to facilitate a fairer and quicker probe, which would help fix responsibility for what is emerging as India’s biggest bankruptcy.

The Serious Fraud Investigation Office (SFIO) had sought information from CAM regarding scope of engagement of IL&FS, advice, and remuneration at IL&FS and ITNL, and at numerous other Special Purpose Vehicles of the infrastructure financier.

The Centre had ordered an investigation into the affairs of IL&FS and its subsidiaries and directed CAM to provide documents on its assignments. However, the law firm was bound by the confidentiality agreement with IL&FS that prevented it from sharing these details. The company’s consent was required to make the relevant disclosures.

SFIO has sought for entity-wise details. It is also looking at the advice given by CAM, and whether the broader systemic fallout could have been contained.

The notices also state that failure to provide the required information could result in action against the firm under section 217(8) of the Companies Act, 2013 which gives the agency the power to recommend penal action against a person/entity for failing to co-operate in the probe without reasonable cause.

Last year, the Ministry of Corporate Affairs (MCA) had moved a petition at the bankruptcy tribunal in Mumbai to overthrow the old management, and seize control of the company after it defaulted on Rs. 91,000 crore worth of outstanding loans.