Moody's Indian Arm ICRA Terminates Its MD And Group CEO Naresh Takkar Pending SEBI Probe Linked To IL&FS

Credit rating agency ICRA Ltd has terminated its managing director and group CEO Naresh Takkar.

ICRA stated in a communication issued to the stock exchanges recently that the decision was made after taking into account the best interests of the company and its various stakeholders.

Takkar had been on indefinite leave since July pending an inquiry by the Securities and Exchange Board of India (SEBI) after a whistleblower alleged interference by top ICRA executives in issuing good ratings to Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries.

International credit rating agency Moody’s Investors’ Service is the rating agency’s largest shareholder, owning 51.87% in ICRA.

While ICRA did not declare what the complaint was about, several media reports at the time had indicated that it was connected to the IL&FS controversy. At the time, it was declared that Takkar would be on forced leave of absence until the company finished examining the concerns raised in the complaint that was forwarded by SEBI.

The company’s press release put out on Thursday, August 29, made no mention of the complaint or its examination of the same. It merely states that the ICRA board will now start a search for his replacement.

The release has indicated that Vipul Agarwal, who was appointed Interim COO on July 1, 2019, would remain responsible for the day-to-day operation of ICRA until a CEO is appointed.

In May 2019, media reports had indicated that top ICRA officials were being probed by SEBI over allegations that it had influenced the ‘AAA’ rating on IL&FS. Reports at that time said a complaint had been sent to the market regulator over this matter.

SEBI is also probing the case and has launched adjudication proceedings against ICRA, CARE Ratings and India Ratings in the ratings assigned to IL&FS and its group firms after a whistleblower’s complaint. In May, ICRA appointed external experts to look into the anonymous representation, forwarded by SEBI, and sent Takkar on leave in July. After ICRA, CARE Ratings, too, had sent its MD and CEO Rajesh Mokashi on indefinite leave.

A draft forensic analysis report by Grant Thornton India LLP commissioned by the IL&FS board appeared to lay out a chain of events in which senior ICRA officials including Takkar met with IL&FS’s management, the outcome of which may have mitigated a potential downgrade of ratings of the infrastructure financier.

However, ICRA and other agencies have strongly contested the findings of the Grant Thornton report, noting that it shows no illegality and that is largely on the basis of “unverified information”.

In July 2019, the well-known ratings agency had sent Takkar on leave until further notice after receiving an anonymous complaint that had been forwarded to the company by capital markets regulator SEBI.