IL&FS Mess: Midas Touch Seeks CBI Probe, Forensic Audit of IL&FS Group
Midas Touch Investors' Association (Midas Touch), a well-known investor organisation, has requested Arun Jaitley, Minister of Finance, for detailed investigation in the Infrastructure Leasing and Financial Services (IL&FS) mess by Central Bureau of Investigation (CBI).
 
According to Virendra Jain, President of Midas Touch, the investigation ordered by Serious Fraud Investigation Office (SFIO) may not be able to cover the entire sweep of scam as IL&FS is a large systemically important non-deposit accepting core investment company of the country, and is regulated by Reserve Bank of India (RBI) and other regulators. 
 
In such scenario, "…the remit of SFIO, in our view, is limited and would not encompass inquiry and investigation, which may be required under other areas of administration under the present scenario. In view of the present circumstances, it may be appropriate that an inquiry and investigation to be undertaken by CBI be ordered. The SFIO investigation already ordered may supplement CBI probe," Mr Jain says in a letter.
 
Midas Touch says there is a need to carry out forensic audit of accounts of entire 348 group companies of IL&FS and fix accountability for dereliction of duty by the board of directors, the auditors, credit rating agencies, subscribers to its debt paper and all the respective regulators as well as to retrieve money and assets by recovering ill-gotten wealth from its (erstwhile) chief executive officers, managers, personnel and all those who benefited. 
 
Here are the demands made by Midas Touch in its letter to the finance minister...
 
1) To order an inquiry and investigation by CBI in the entire gamut of issues relating to IL&FS and its 348 subsidiaries, associates and joint ventures; 
 
2) To fix accountability for dereliction of duty by the chief executives, board of directors, the auditors, the credit rating agencies, the subscribers to its debt paper and all the respective regulators; 
 
3) A time-bound cash-in-cash-out statement of all the 348 entities in the IL&FS fold. This can be done by independent auditors. This will clearly identify the holes. 
 
4) A forensic audit to follow the money trail from IL&FS and its 348 direct or indirect subsidiaries and associates, to establish the quantum and destination of siphoned funds and assets illegally transferred through any device.  
 
5) A forensic audit to follow the money trail from IL&FS and its 348 direct and indirect subsidiaries and associates, to their chief executive officers, managing directors, directors, managers, key employees and their families, relatives and other entities to establish the quantum and destination of siphoned funds, ill-gotten gains and assets illegally transferred through any device.  
 
6) Confiscation, recovery and restoration to IL&FS and its subsidiaries of all ill-gotten gains, funds siphoned off and assets diverted through any device.  
 
7) An immediate impounding of passports of key management personnel (this number now should may be anywhere between 50 and 75 in the group) and get them to submit a list of their assets vide a sworn affidavit (which can then be prevented from alienation without the express permission of the court).
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IL&FS Mess: NCLAT Stays All Proceedings Against IL&FS, its 348 Group Companies
The National Company Law Appellate Tribunal (NCLAT) on Monday stayed all proceedings against Infrastructure Leasing and Financial Services (IL&FS) and its 348 group companies till further order.
 
The order came over an urgent petition moved by the Ministry of Corporate Affairs after the Mumbai Bench of the National Company Law Tribunal (NCLT) turned down its plea for 90 days moratorium over the loans taken by IL&FS and its subsidiaries.
 
The bench of Justice SJ Mukhopadhaya and Justice AIS Cheema, in its order, noted, "...we find that the NCLT while accepted that no petition under any of the provision of the Insolvency and Bankruptcy Code (I&B Code) can be preferred by any party for initiation of ‘Corporate Insolvency Resolution Process’ against IL&FS and its 348 Group Companies till the Central Government issue appropriate notification with regard to one or other making the provisions applicable to them, refused to pass the interim order in view of prayer of ‘Moratorium’ made by the Appellant-‘Union of India’.
 
Otherwise the Tribunal has appreciated the difficulties, which are being faced by the ‘IL&FS’ and its 348 Group Companies."
 
The NCLAT also asked top five lenders of IL&FS to submit their replies over the government’s plea for 90 days moratorium. 
 
The government had requested the NCLT to restrain other creditors of IL&FS from filing suits, in case of non-repayment of loans.
 
Next hearing in this matter is scheduled on 13 November 2018.
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IL&FS Board Replaces Nominee Directors on Various Subsidiaries
The new board of Infrastructure Leasing & Financial Services (IL&FS) headed by Uday Kotak has started replacing nominee directors on various subsidiaries of the conglomerate
 
In a statement, IL&FS says, "...the board approved formation of a core operating committee under Vineet Nayyar and have also initiated austerity measures related to personnel and operating expense."
 
"Pursuant to the recommendations of the audit committee, the board required a full audit of standalone and consolidated accounts as on 30 September 2018," it added. 
 
The new board has nominated Vineet Nayyar, Nand Kishore and Malini Shankar on the board of IL&FS Financial Services Ltd (IFIN).
 
Mr Nayyer and CS Rajan are nominated on board of IL&FS Transportation Networks Ltd (ITNL), while Nand Kishore is nominated on board of IL&FS Environmental Infrastructure & Services Ltd (IEISL). 
 
GC Chaturvedi and Mr Nayyar are nominee members of the board at IL&FS Energy Development Co Ltd. Mr Rajan is nomited for the board of IL&FS Engineering & Construction Co Ltd (IECCL), Mr Nayyer on IL&FS Education and Technology Services Ltd (IETS), Mr Kishore at IL&FS Technologies Ltd (ITL), and Dr Malini Shankar will be nominee director on the board of Tamil Nadu Water Investment Co Ltd (TWIC).
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