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Chennai EOW arrests Ravi Parthasarathy, kingpin of Rs 1 lakh cr IL&FS scam
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SME Times News Bureau | 11 Jun, 2021
The Economic Offences Wing (EOW) of Chennai Police said on Friday that
it has arrested Ravi Parthasarathy, the former Chairman of IL&FS
Group, in the Rs 1 lakh crore scam, which triggered a liquidity crisis
in the financial services market in 2018.
EOW DSP Prakash Babu
confirmed to IANS that Parthasarthy has been arrested and taken into
police custody for 15 days. He added that his bail hearing will come up
for hearing on Monday.
Parthasarthy, the kingpin, mastermind and
chief architect of the Rs 1 lakh crore IL&FS scam, has been arrested
by the EOW in connection with Crime No. 13 of 2020, dated September 20,
2020, the EOW of Chennai Police said in a statement.
"The
accused, Ravi Parthasarathy, is the former Chairman and Managing
Director of the entire IL&FS Group. The IL&FS Group, which
consists of more than 350 group companies, was used as a vehicle to
perpetrate fraud by then management of IL&FS Group which was headed
by the then Chairman and MD-CEO Ravi Parthasarathy," said the EOW.
The
EOW stated that the FIR has been registered in connection with the
complaint given by 63 moons Technologies Ltd, which lost a sum of Rs 200
crore. Complaints from various other depositors have also been received
by the EOW.
The anticipatory bail petition filed by the accused
Parthasarathy in Crl OP No. 2007 of 2021 was also dismissed by the
Madras High Court. Aggrieved depositors and investors of IL&FS
Transportation Networks India Ltd (ITNL) can forward their claims to
EOW, it added.
Notably, Parthasarathy, who is said to be the
close confidant of former Finance Minister P. Chidambarm, is accused of
fraud with intent to injure the interests of the company, its
shareholders and lenders, resulting in wrongful loss to the company.
Under
his stewardship, trouble surfaced at IL&FS in the July-September
quarter of 2018, when two of its subsidiaries started defaulting on
repayment of loans and inter-corporate deposits to lenders.
Subsequent
series of defaults caused a systemic problem with many non-banking
finance companies (NBFCs) running into financial issues.
On
October 1, 2018, the Central government took steps to take control of
Infrastructure Leasing & Financial Services Limited (IL&FS)
through a directive by the National Company Law Tribunal (NCLT) and
arrest the spread of the contagion to the financial markets. A new board
under the leadership of banker Uday Kotak was constituted as the
earlier board was deemed to have failed to discharge its duties.
The
Government of India (GoI) in its petition has mentioned, "Ravi
Parthasarathy and his team were responsible for the negligence,
incompetency and misleading the public by presenting rosy financial
statements. IL&FS was camouflaging its financial statements by
hiding a severe mismatch between its cash flows and payment obligations.
It was also hiding total lack of liquidity and glaring adverse
financial ratios."
Parthasarathy, who was at the helm of
IL&FS for over 25 years, is accused of masterminding one of the
largest financial frauds and systematically driving a behemoth of a
financial institution to financial ruins.
In addition to the
premier investigating agency, the Serious Fraud Investigation Office
(SFIO), the Reserve Bank of India, the Ministry of Corporate Affairs
(Union of India), the Registrar of Companies (RoC), the National Company
Law Tribunal (NCLT), Mumbai, along with the Grant Thornton forensic
report have made adverse findings against him.
The RoC has
observed mismanagement and compromise in corporate governance norms,
while there is another FIR registered by the EOW-New Delhi against
Parthasarathy and Hari Sankaran under various sections of IPC.
In
one of the most damaging findings, the GoI petition mentioned,
"IL&FS had created a trust known as the Employee Welfare Trust which
was used as an instrument to enrich its directors at the cost of the
Company. The said trust was used to perpetrate a fraud on IL&FS and
its group companies. The trust owned 12 per cent of IL&FS Limited.
Ravi Parthasarathy and certain other senior IL&FS personnel were
major beneficiaries of the Trust."
The RBI report, which it
submitted on March 22, 2019, underlined that the major role in
perpetrating the fraud and financial irregularity was played by
Parthasarathy during his tenure as the Group Chairman.
The
report pointed out indiscriminate sanctioning of loans, flouting of RBI
norms, fraudulent transactions to certain accounts, showing inflated
numbers of subsidiaries, conflict of interests, and the concentration of
power in the hands of few, which included Parthasarathy.
The
SFIO complaint, dated May 30, 2019, named Parthasarathy as the prime
accused. The report mentioned that Parthasarathy was the key
decision-maker in the IL&FS Group and used the group as his fiefdom.
Being the Chairman of IL&FS Group and Director of its
various subsidiaries, the coterie led by Parthasarathy abused its
position and diverted funds of its group companies.
It may be
noted that the NCLT-Mumbai order to recast the accounts of the IL&FS
Group was challenged by Parthasarathy in the Supreme Court, which
upheld the GoI decision.
The forensic audit by Grant Thornton
also revealed a bevy of illegal practices, bribing of credit rating
agencies and other fraudulent practices, indicating clearly the
involvement of the then IL&FS Group Chairman Parthasarathy.
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