The Serious Fraud Investigation Office (SFIO) on Monday arrested former vice chairman of crisis-hit IL&FS for fraudulent conduct and causing wrongful loss to the company and its creditors, official sources said.
Hari Sankaran
Mumbai:
The agency has been granted custody of Sankaran till April 4.
IL&FS Financial Services had borrowings of more than Rs 17,000 crore through debt instruments and bank loans. Provident funds, pension funds, gratuity funds, mutual funds, public and private sector banks, are among those who have invested in these debt instruments, the sources said.
The alleged financial irregularities at the IL&FS came to light last year after some group entities defaulted on debt repayments. The government, which superseded the company’s board, is working on a resolution plan.
NCLAT looking to protect PF, Pension funds investments in toxic IL& FS bonds
Meanwhile, courts have come to the rescue of lakhs of investors who face the prospect of losing their entire retirement savings parked in the toxic IL&FS bonds by their respective pension and provident fund trusts.
Sources said that the National Company Law Appellate Tribunal (NCLAT) hearing petitions with respect to IL FS resolution, has now asked the new management of the insolvent company to provide it details of PF and pension funds investment in individual “amber” entities.
The move, legal experts said, should be seen as the court’s efforts to ensure that investments by pension and PF trusts is not lost in any resolution plan for IL&FS and that these get priority even when repayment start for “amber” grouped entities where firms are expected to meet only operational payment obligations.
Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL& FS bonds. As these investments were classified as unsecured debt, funds feared that all money would be lost if all market-related risks fell on them.
This is the first arrest made by the probe agency in the IL&FS case. Sankaran was arrested in Mumbai in connection with the ongoing investigations into the affairs of IL& FS and its group entities. Sources said Sankaran has been arrested on the grounds of abusing his powers in IL& FS Financial Services Ltd through fraudulent conduct and in granting loans to entities that were not credit-worthy or were declared as non-performing accounts. Such actions caused wrongful loss to the company and its creditors.
The agency has been granted custody of Sankaran till April 4.
IL&FS Financial Services had borrowings of more than Rs 17,000 crore through debt instruments and bank loans. Provident funds, pension funds, gratuity funds, mutual funds, public and private sector banks, are among those who have invested in these debt instruments, the sources said.
The alleged financial irregularities at the IL&FS came to light last year after some group entities defaulted on debt repayments. The government, which superseded the company’s board, is working on a resolution plan.
NCLAT looking to protect PF, Pension funds investments in toxic IL& FS bonds
Meanwhile, courts have come to the rescue of lakhs of investors who face the prospect of losing their entire retirement savings parked in the toxic IL&FS bonds by their respective pension and provident fund trusts.
Sources said that the National Company Law Appellate Tribunal (NCLAT) hearing petitions with respect to IL FS resolution, has now asked the new management of the insolvent company to provide it details of PF and pension funds investment in individual “amber” entities.
The move, legal experts said, should be seen as the court’s efforts to ensure that investments by pension and PF trusts is not lost in any resolution plan for IL&FS and that these get priority even when repayment start for “amber” grouped entities where firms are expected to meet only operational payment obligations.
Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL& FS bonds. As these investments were classified as unsecured debt, funds feared that all money would be lost if all market-related risks fell on them.