New Delhi: As the probe of the Serious Fraud Investigation Office (SFIO) intensifies, a series of lapses in corporate governance, monetary irregularities such as ever-greening of loans, deliberate delay in recoveries and even a whistleblower complaint are learnt to have brushed aside by the then management in 2017.
The investigation has found that all violations in money transfers, ever-greening of loans, deliberate delay in recoveries from the defaulters and even a whistleblower complaint were brushed aside by the then management in 2017, said the detailed SFIO probe on IL&S Financial Services Ltd (IFIN).
Besides, top officials of the Corporate Affairs Ministry also said that various analyses of outward and inward e-mails, collected from personnel and other sources have revealed that a whistleblower complaint was received in early 2017. “However, the audit committee, which is required to have an oversight on the vigil mechanism at the company, failed to act properly with respect to the complaint,” they said.
The SFIO investigation also revealed that the long-running fraudulent activities at IL&FS could have been avoided if the cover-up job done by the top honchos in the infrastructure giant in connivance with some select independent directors were duly addressed by the whistleblower complaints.
As a multi-pronged strategy continues for revival of the ailing group and to bring to book the perpetrators of the fraud, the earlier audit committee of IFIN has been found at fault on multiple occasions.
Citing the SFIO investigation report, officials also said the IFIN management was aware of the whistleblower complaint was received in March 2017 but the audit committee discussed it only in December 2017. “Further, the investigation found that the audit committee simply went by the management version and did not inquire into the allegations made in the whistleblower complaint,’ they added.
The scam at IL&FS hit last year after several group entities defaulted on repayments dues. Later, the government superseded the board of directors.
IFIN, which has been found to be funding its own revenues for several years, was the main source of funds for the IL&FS group entities. The group had accumulated a debt burden of over Rs 94,000 crore as of March 2018.
Moreover, the officials also noted that the audit committee did not raise any red flag even when there were instances of disbursal and bullet recovery of loans on same day or within a few days. “IFIN’s lending to group companies jumped to around Rs 5,200 crore, which was 37 per cent of the company's total loans and advances in 2017-18 fiscal,” they said.
The probe also found that IFIN’s audit committee overlooked numerous impairment indicators and actively connived with the management to present a good picture of the company’s financials to prospective investors.
