ILFS Mess: SFIO Team Takes Charge of Server, Grills Officials. Lookout Notices at the Airports
While the media was occupied with the government’s sudden move to replace the board of Infrastructure Leasing and Financial Services (IL&FS), another drama was playing out at the swanky headquarters of the firm. 
 
The Serious Frauds Investigation Office (SFIO) was primed to spring into action, even as the government moved the NCLT (National Company Law Tribunal) at Mumbai. Sources say that an SFIO team was already hanging around the landmark IL&FS building waiting for the NCLT order. 
 
As soon as it received intimation that the NCLT had ruled in the government’s favour, SFIO officials swarmed into the building and took charge of the 9th floor which houses top management. 
 
They took control of the main server, to ensure that no documents/emails or information was destroyed or tampered with. Some insiders say that the server was shut down. 
 
While details could not be clearly ascertained, some employees believe that the SFIO team was accompanied by officials form the Reserve Bank of India. 
 
One source says that the two seniormost officials who have been with IL&FS for decades were being questioned by SFIO late in the evening. They were vice-chairman and managing director (MD) Hari Sankaran and Arun Saha, the joint MD and CEO (chief executive officer). 
 
 
Sources say that lookout notices have been put out at airports to prevent the top brass, including Mr Sankaran, Ramesh C Bawa and K Ramchand from leaving the country. Ironically, right until Saturday, when IL&FS held its board meeting, the top management and the board behaved as though it was business as usual and had put out a statement to say that key shareholders would subscribe to a rights issue to bail the company out of its difficulties. 
 
Interestingly, while IL&FS has always presented itself as a quasi-government entity, two of its largest shareholders are ORIX Corporation of Japan, which has a 23.54% stake and Abu Dhabi Investment Authority with 12.56% stake. 
 
Strangely, these large foreign shareholders do not seem to have questioned the management about its poor performance and lavish perks. While some investors have been trying to claim that top management hid issues from them, this is clearly false. 
 
Banking analyst Hemindra Hazari has written about how the complete erosion of IL&FS’s networth has been disclosed in the consolidated balance sheet for several years. 
 
In an article in The Wire he writes: “A cursory analysis of the consolidated accounts however reveals a horrifying saga: IL&FS has been an insolvent company since at least FY’2014 (no disclosure of consolidated accounts prior to FY’2014).”
 
However, senior management and the board not only put a lid on the mess, but also continued to sanction the lavish salaries, perks and high-spending ways of senior managers across the massive and diversified IL&FS group. 
 
Clearly, a lot of dirt is set to come out if the SFIO is allowed to investigate without interference. The modus operandi of IL&FS and how it gold-plated projects is already in the public domain. 
 
Former bureaucrats and executives who quit the group and attempted to expose the group have been hounded, humiliated and even arrested—the media was silenced by the confused narrative and false charges that the company put out. Others were too intimidated to speak. 
 
Over the past 10 days, many of these victims have begun to speak out, especially after the gold-plating of the GIFT City project was exposed by Moneylife. In the next few days Moneylife intends to reveal some of these inside stories. 
 
Comments
Ashok Senniappan
4 years ago
Make hay while sun shines. Have they given up the Indian citizen ship?
Sunil Rebello
4 years ago
The base problem of IL&FS is the GIFT city.
We may say that IL&FS is not a PSU but it always acted as a quasi PSU.
your article: 'Former bureaucrats and executives who quit the group and attempted to expose the group have been hounded, humiliated and even arrested'
This tactic is the clear example of our present government - shoot the messenger.
This is also exemplified in their name changing spree all over the country.
Now the whole weight of government authorities - RBI NCLT SIFO CBI ED etc etc are on IL&FS head.
But do they have expert advise or are they depending on the crap advise of the present Financial & Law team.
To change some major scam - you have to first accept that there is a scam.
IL&FS was not paid by the GOI for their work, Therefore the GOI takes it over.
who will take the haircut of 80,000 Cores+. for sure it will be us tax payers
sharafuddeen
4 years ago
Sucheta,appreciate your followup article(investigstion). Keep following and you will come across more childish way top brass in day to day management of IL&FS had been acting. The long & short of the story is that after reaching top of the ladder in finance industry, regulators seldom dare to scrutinise applying mind. My comments after reading your first article on this messup could not be seen(is not visible online). It was my first hand experience years ago.
JayaKumar VeeraRaghavan
4 years ago
How does this work , seems to be another 10000+ crore scam . Again whistle blowers silenced or ignored inspite of guvernemnt stake in it and size of likely default is so huge . Keeps happening with public money directly or indirectly
Ravindran
4 years ago
In all these drama, one fails to understand how the rating agencies' criminal role have been left out. Who controls the rating agencies (obviously SEBI and the RBI) and why no action is not being taken on the officials of SEBI/RBI and the rating agencies? The rating agency concerned should be debarred from assigning rating for certain years and a portion of the default amount should be recovered from it.
S Balakrishnan
4 years ago
What abt r p who seems to have been in the drivet's seat from the beginning resigning for 'health' reasons just when it was going to blow up.
Great timing.
SuchindranathAiyerS
4 years ago
IL & FS: Shutting the gate after the horses have fled. Will the investors get their money back?
SuchindranathAiyerS
4 years ago
India with far less resources is following the US trajectory to financial ruin for Non VIP citizens with more assiduity albeit indigenous " make in India" versions of Fannie May and Junk Loans / Bonds:
K V RAO
4 years ago
It is quite a surprise and unfortunate that eminent personalities (read R C Bhargav and Jaitheerth Rao)are part of the board.
This only confirms stuffing strong persons in the board does not guarantee governance. The best option for them was to come out of the mess. If they have noticed malfeasance as early as 2014, how come they joined the board?
V Ramesh
4 years ago
What was the rush. They could have waited for a few more years. What does "grill" mean? Is it like toast?
I think LIC has invested huge amounts of money (yours and mine) in several companies, and it does not look after these investments well.
Ashok Senniappan
4 years ago
When the companies networth is completely eroded in 2014, then what the hell the regulator doing?
Ashok Senniappan
4 years ago
All the senior officials of Banks/Auditors/ Civil Servants involved in scams
should not be permitted to leave the country
BV SUDHANVA
4 years ago
It would be interesting to see the network of the management and the involvement of the network
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