The special Prevention of Money Laundering Act court on Thursday remanded Arun Kumar Saha, former joint managing director of Infrastructure Leasing and Financial Services (IL&FS) and a former member of the committee of directors of IL&FS Financial Services Limited (IFIN), and Ramchand Karunakaran, former managing director of IL&FS Transportation Network (ITNL), in the Enforcement Directorate’s (ED) custody till June 25.
The ED’s counsel, Hiten Venegavkar, sought a seven-day custody of Mr. Saha and Mr. Karunakaran. The investigation has revealed that the ILFS group created a debt of more than ₹91,000 crore and directly obtained/generated benefit in the form of deputation cost to a substantial amount and had projected the same as untainted. At the IFIN, it is suspected that there has been a laundering of more than ₹5,000 crore of the shareholders’ money.
The agency said in infrastructure funding, Mr. Karunakaran was the decision maker. “It has also appeared that as on March 31, 2018, of the total lending by the IFIN of ₹14,740 crore, ₹1,150 crore was sanctioned to the ITNL alone. Apart from that, third party funding was done to the ITNL, which remained outstanding to the tune of ₹2,270 crore.”
The ITNL, as on debts, is staring at a debt of more than ₹35,000 crore, the ED said. “Mr. Karunakaran was running the ITNL as his personal fiefdom and had scant regard for due process of law and well being of the group. He, in order to perpetuate the falsities and to hide the actual precarious situation of the company, was resorting to taking loans from the IFIN indirectly through the contracting firms of ITNL/ILFS group. This was done with the motive of hiding facts from the regulators. He further complicated the matters and increased the liabilities and at the same time, projected a rosy picture to cover the grim situation of the IL&FS. He admitted that money was routed to the ITNL and SPVs by the IFIN through third parties: Beigh Construction and New India Structure,” the agency said.
According to the ED, Mr. Saha was aware of the stressed asset portfolio and the modus operandi used for granting loans to groups of companies of existing defaulting borrowers in order to prevent their being classified as non-performing assets.
“He did not ensure adequate disclosure or reporting of the facts brought out in the reports of the RBI for 2016-2017 and 2017-2018. He connived with the management and overlooked the numerous impairment indicators by agreeing with the decisions of the management to differ the provision of diminution in books of accounts. These particular finances were also used for borrowing from the market, wherein such incorrect financials were used to lure the investors investing the public money,” the agency said.