New Delhi: The Enforcement Directorate charge sheet against IL&FS and the cabal which ran it gives the full scope and extent of the malfeasance and all pervasive rot. Pertinently, it refers to the closed user group individually and by name and provides details on their conduct.


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The conclusion is that it was pretty much a circus with Ravi Parthasarthy as the ringmaster or even King as the rest of the crew played courtiers.


In what used to be a virtual command performance more or less every day, the courtiers used to play to the gallery and try and please the Emperor. The ED applying PMLA has indicted each and every member of the claque for contravention of the Money Laundering Act.


The scathing denouement of the modus operandi states: The accused named in connivance and collusion with each other, indulged in initially locating and identifying dubious companies which claimed to have been engaged in infrastructure development and later issuing fictitious purchase orders for non-existent works. The forte of such companies lay only in providing accommodation entries in the form of bogus billing including bogus share capital and advancing unsecured loans to the beneficiary in lieu of commission or kickbacks.


The via media was the use of bogus entities being awarded bogus contracts and thereafter invoices were raised by those companies, layering was done through accounts and cash was taken and handed back.


This was a common thread in the work orders issued to these bogus companies, as nearly all the work orders were issued to either resettle the shopkeepers or for road repairs or possibly road widening and the accused collectively siphoned off Rs 7,400 crore.


THE ACCUSED CABAL


Ravi Parthasarathy, Chairman of ILFS and one of the members of Committee of Directors of IFIN, was one of the senior-most officers of ILFS as well as of IFIN. He was the Chairman of Industrial Leasing and Housing Finance Ltd. (IL&FS) and one of the members of Committee of Directors of IFIN. He had played very crucial role in sanctioning huge loans by committing scheduled offence to M/s SIVA Group. His personal relation with C. Sivasankaran is also evident from the copies of e-mail collected during the course of investigation and from the statements of officials of IFIN recorded u/s 50(2)&(3) of PMLA, 2002, which is sufficient to prove his collusion and connivance with C. Sivasankaran while sanctioning loans to various Siva Group Companies by committing Scheduled Offence.


The said facts were also reiterated by Ramesh Bawa and Hari Sankaran during the course of their statement recorded u/s 50 (2) & (3) of PMLA, 2002. By doing so, he has not only knowingly assisted M/s Siva group in committing offence of money laundering, but also received huge remuneration apart from salary, during the period when ILFS and IFIN were going through serious liquidity problem.


The amount received by him is part of the proceeds of crime in terms of Section 2 (1) (u) of the Act, which was thereafter laundered and projected by him as untainted. Hence in terms of Section 3 read with Section 70 of PMLA, 2002, Ravi Parthasarathy has committed the offence of money laundering.


Ramesh Bawa, Managing Director and one of the members of Committee of Directors of IFIN: Being Managing Director of IFIN, he is responsible all types of financial sanction. It is evident from the statement given by him as well as from the statement of officials of IFIN, Chairman of Audit Committee, Chief Rating Officers and copies of e-mail collected during the course of investigation that he not only failed to discharge his duty with due diligence while sanctioning loans to M/s Siva Group and to those entities for financing to ITNL in spite of restriction imposed by RBI (as detailed in above paras), but also he knowingly assisted in sanctioning loans to M/s SIVA Group (for rest of Groups, investigation is under progress) by committing scheduled offence and hence knowingly assisted M/s SIVA group in committing the offence of Money Laundering.


He has also received huge remuneration (Deputation cost & PRP) apart from salary, during the period when ILFS and IFIN were going through serious liquidity problem. He received deputation cost for his roles and responsibilities in IFIN which was increased suddenly in F.Y. ending on March 31, 2017. The amount received by them is part of the proceeds of crime in terms of Section 2 (1)(u) of the Act which was thereafter laundered and projected by him as untainted. Hence in terms of Section 3 read with Section 70 of PMLA, 2002, Ramesh Bawa has committed the offence of Money Laundering.


Arun Kumar Saha, Jt. Managing Director of ILFS and one of the members of Committee of Directors of IFIN: Arun Kumar Saha had been a non-
executive director and one of the members of Committee of Directors. Audit Committee and Member of Risk Management Committee which was constituted pursuant to the RBI Regulations, to oversee, identify and evaluate internal and external risks associated with the business operations of the Company, to ensure compliance with statutory regulations and internal guidelines.


In addition, thereto, RMC was periodically reviewing the stress testing scenario in line with what had been prescribed by the RBI towards commercial banks with the objective of an early adoption wherein his role as a member was to participate in the proceedings of the RMC. Further he was also the Chairman of Asset Liability Management Committee wherein his role was to review asset liability profile, maturity
mismatches and other parameters which was a requirement under the RBI guidelines.


Apart from that, Arun Kumar Saha was one of the members of Audit Committee and also one of the committee of Directors in ITNL. Arun Kumar Saha had been holding responsible position in IL&FS and as well as in IFIN. From the statement of the IFIN officials namely Ashesh Dutta, Vibhav Kapoor and Milind Patel, it is absolutely clear that the CoD had played key role in sanctioning the loan in IFIN. He was fully aware of the facts that loans were sanctioned to the companies viz. M/s SIVA Group, M/s. ABG Group, M/s SKIL Group, which are financially stressed and not capable to repay.


In spite of that they continued to sanction huge loans to the said financially stressed groups to settle their earlier loans and to prevent them from being NPA and thus knowingly assisted in evergreening of funds from IFIN to SIVA Group and M/s ABG Group (for rest of the groups investigation is under progress).


During the course of statement, on being asked if he accepted that he had right to raise objections but he never did in approving loans by other members of CoDs. He has assisted knowingly in financing financially stressed companies. His assistance to SIVA Group is also evident from the copies of e-mail collected during the course of investigation and from the statements of officials of IFIN recorded u/s 50(2)&(3) of PMLA, 2002, which is sufficient to prove his collusion and connivance with C. Sivasankaran while sanctioning loans to various Siva Group Companies by committing scheduled offence. Arun Kumar Saha was the Chairman of Hill County Properties Ltd.


From the letter received from IFIN it is revealed that Hill County Properties Ltd. sold two Villas to one of the Group companies of SIVA group namely Utoo Cabs at a very low price and so far, Utoo cabs has made partial payment. Registry of the said properties are yet not executed. The said facts is also reiterated by Ramesh Bawa and Hari Sankaran during their course of statement recorded u/s 50 (2)&(3) of PMLA, 2002.


From the documents submitted by IFIN it is also clear that the Committee of Directors of IFIN sanctioned loans to the parties to the tune of Rs 2,270 crore, for further financing to ITNL and its Special Purpose Vehicles. The entire loans were sanctioned by committing the scheduled offence, to the companies mentioned above.


The loans thus sanctioned by committing the scheduled offence were first transferred to the bank accounts of entities mentioned above and subsequently those entities transferred the entire sum to the bank account of ITNL and ITNL utilized the same for repaying its loan with IFIN as well as for its Special Purpose Vehicles. Ultimately the entire loans remained unpaid to IFIN.


Apart from that, it is also evident from the statement of S.S. Kohli that Audit Committee was never projected the actual financial picture and it is pertinent to note that Arun Kumar Saha was one of the members of Audit Committee of IFIN and in spite of that he did not take any initiative.


He was one of the members of Risk Management Committee.


In the case of M/s ABG Group the collateral securities in the form of shares of M/s ABG Cement were released and subsequently again mortgaged for loan in the different company of the same Group. Arun Kumar Saha, being the member of various prime committees of IFIN, at no point objected to such transactions which is also evident from his statement that although he had power to object, but he never did.


During the course of statement Chief Rating Officers have also accepted that they were being pressurized by Arun Saha and Ravi Parathasarathy and Ramesh Bawa for favourable ratings. The rating officer of ICRA who was conducting rating of IFIN has clearly stated that the rating of IFIN would have been different if those facts were disclosed to them. Therefore, by not declaring the actual position before rating agencies and by creating pressure for high ratings, the members of Cod of IFIN maintained high rating under the parentage of IL&FS.


Arun Saha was aware of the stressed asset portfolio, the modus operandi used for granting loans to group companies of existing defaulting
borrowers in order to prevent their being classified as NPA. He did not ensure adequate disclosure or reporting of the facts brought out in the reports of RBI for the years 2016-17 and 2017-18. He connived with the management and overlooked the numerous impairment indicators by agreeing with the decisions of management to differ the provision of diminution in books of accounts. These particular financials were also used for borrowing from market, wherein such incorrect financials were used to lure the investors investing the public money.


In view of the above it is absolutely clear that Arun Kumar Saha has knowingly assisted in the offence of money laundering to M/s SIVA Group (for rest of groups, investigation under PMLA, 2002 is under process and will be submitted in the supplementary Prosecution Complaint).


At the same time by doing so and projecting the same as genuine, the committee of Directors of IFIN maintained credentials of IFIN and their remuneration increased sharply in spite of declining financials of IFIN. Hence in terms of Section 3 read with Section 70 of
PMLA, 2002, Arun Kumar Saha has committed the offence of money laundering.


Hari Sankaran, one of the members of Committee of Directors of IFIN: He was one of the senior most Officer of ILFS as well as of IFIN, like Ravi Parthasarathy. He had played very crucial role in sanctioning huge loans by committing scheduled offence, to M/s SIVA Group. His personal relation with C. Sivasankaran is also evident from the copies of e-mail collected during the course of investigation and from the statements of officials of IFIN recorded u/s 50(2)&(3) of PMLA, 2002, which is sufficient to prove his collusion and connivance with C. Sivasankaran while sanctioning loans to various Siva Group companies, by committing Scheduled Offence. From the statement given u/s 50(2)&(3) of PMLA, 2002, he admitted that there was nothing wrong in financing to those companies.


Further, he stated about those third parties to whom loans were sanctioned for further financing to ITNL, as third party companies that were also undertaking construction of on-going ITNL projects, which is absolutely wrong.


From the submission made by those third parties, it is absolutely clear that those companies had nothing to do with ITNL. Therefore, Hari Sankaran has not only knowingly assisted M/s Siva group in committing offence of money laundering, but also received huge remuneration apart from salary, during the period when ILFS and IFIN were going through serious liquidity problem.


The amount received by them is part of the proceeds of crime in terms of Section 2 (1)(u) of the Act which was thereafter laundered and projected by them as untainted. Hence in terms of Section 3 read with Section 70 of PMLA, 2002, Hari Sankaran has committed the offence of money laundering.


Ramchand Karunakaran: He was the Managing Director of ITNL and one of the members of Committee of Directors of IFIN (for infrastructure projects). IFIN had the sole mandate to do debt and equity syndication for ITNL. ITNL would provide to IFIN requirements for projects and for ITNL itself.


During the course of investigation, it appeared that RBI in its Inspection Report dated November 1, 2017, had advised IFIN to run down its
exposures to group companies with no fresh lending (Annexure--). In spite of that, ITNL managed to receive fund from IFIN.


Investigation has revealed that for the aforesaid loans sanctioned to various entities namely M/s Prakash Constrowell Ltd., Attivo Economic Zone Pvt. Ltd, Kalyan Sangam Business Credit Ltd., Sahaj - e - Village, Giridhan Projects Pvt. Ltd., Vistar Financers Pvt. Ltd., Wavell Investments Pvt. Ltd., Ramchand Karunakaran had given Letter of Assurance dated March 29, 2018 on behalf of ITNL. Further during the course of statement CFO of M/s GHV Group has stated that they had meetings with K. Ramchand for obtaining fund from IFIN in M/s GHV Hotels Ltd. which is running in loss for the last few years, which was entirely to be transferred to ITNL.


During the recording of his statement on June 3, u/s 50 (2) and (3) of PMLA, 2002, Ramchand admitted that monies were routed to ITNL and SPVs by IFIN through third parties viz. Beigh Construction and New India Structure. However, he feigned ignorance on why the money was routed to ITNL through these entities.


Furthermore, during recording of his statement on June 19, Ramchand completely retracted from his admission made on June 3 and claimed that he was not aware of any such transactions altogether.