Two former IL&FS top executives, namely Arun Kumar Saha and Karunakaran Ramchand have been arrested by the Enforcement Directorate for their alleged involvement in money laundering under Section 19 of the Prevention and Money Laundering Act (PMLA).
Both Saha, who was former joint managing director (MD) of IL&FS Financial Services and Ramchand who was former MD of IL&FS Transportation Networks (ITNL) will be presented at a special court of the PMLA in Mumbai.
It may be recalled that in April, the Serious Fraud Investigation Office (SFIO) had arrested IL&FS' former MD and chief executive (CEO) CEO Ramesh Bawa and Hari Sankaran, former vice chairman of IL&FS in connection with financial irregularities in the company. At present, both Bawa and Sankaran are in judicial custody.
The Enforcement Directorate alleged that Saha and Ramchand, who were members of the Committee of Directors of IL&FS Financial Services (IFIN), were involved in illegal activities. These include sanctioning and disbursement of loans without taking proper security to group companies, which were already in financial distress and unable to repay loans taken earlier.
Allegedly, they were involved in indirectly routing funds from IFIN to ITNL through a third party, which was ITNL’s contractor, which is a violation of Reserve Bank of India (RBI) regulations.
It has also been alleged that both Saha and Ramchand did not co-operate with the Enforcement Directorate and were evasive during the probe.
The Enforcement Directorate apprehends that both former officials are influential people who could try to influence witnesses and destroy evidence.
Incidentally, after examining the books of IFIN and other IL&FS subsidiaries, the IL&FS found suspiciaous transactions between group firms like IL&FS Rail and Transportation Networks, which seem to indicate that these IL&FS group firms had done so deliberately, with an intention to siphon off loan amounts.