L&T staff welfare arm under probe for alleged fraud

India is inspecting accounts of L&T Employees Welfare Foundation Pvt Ltd, a unit of Larsen and Toubro Ltd, for allegations of cheating and misappropriation of funds, people with knowledge of the matter said.

The Registrar of Companies has issued a notice to two companies— LandT Welfare Co Ltd and L&T Employees Welfare

Foundation—seeking their response, and a report is expected by end-September, the people said. The inspection was ordered after an internal inquiry into the allegations made a case for the probe.

The probe follows complaints by a group of employees who alleged that the company deducted contributions from their salaries with the assurance of giving them equity shares of Larsen & Toubro, but instead gave them redeemable preference shares of LandT Welfare Co. The funds collected for employee welfare were allegedly used for expansion by L&T, according to the complaint.

A company spokesperson said L&T has contested the allegations and "the matter is sub judice." Earlier, in 2018, a shareholder and former employee of L&T had filed a petition in the National Company Law Tribunal alleging mismanagement of employee welfare fund and assets of the company.

The complainants alleged the management collected around Rs 150 crore between November 2003 and March 2008 from 30,000 employees and bought shares of L&T, which is now worth Rs 1,7600 crore. Issuing redeemable preference shares instead of the equity shares, the employees have been defrauded and deprived of the appreciation, according to the complaint.