‘Ex-CEO of IFIN helped rating agency official buy multi-crore villa at a discount’
Investigation into the highprofile IL&FS fraud showed that the then CEO of the group’s financial services arm IL&FS Financial Services Ltd (IFIN) helped a senior director of a leading rating agency buy a duplex villa worth crores at a discount when an important circuitous transaction with a defaulter borrower was under way in 2012-13.
The probe by the Serious Fraud Investigation Office (SFIO) has already unearthed connivance of auditors and independent directors with the then top management of IFIN in defrauding the company.
As per the investigation report, which is part of the first chargesheet filed by the SFIO, IFIN and other entities from the IL&FS group continued to enjoy high ratings from various rating agencies, including due to window-dressing of the company books.
As per the report, a part of a loan disbursed to the SIVA Group was used to pay IFIN for the liabilities arising out of a debt syndication fee.
The probe showed that in 2012-13, SIVA Ventures had an outstanding liability against Unitech, while an outstanding loan of IFIN to Unitech was also overdue.
The SFIO probe has revealed that the IFIN top management decided to bail out the SIVA group by funding the repayment of the liabilities of Unitech towards SIVA Ventures. Accordingly, ₹125 crore was disbured to the Unitech group to help it clear dues of approximately ₹80 crore and consecutively for SIVA to clear the loans of IFIN. In this transaction, IFIN not only self-funded its advisory income of ₹8 crore but also granted additional loans of approximately ₹45 crore.
However, post transaction, the SIVA group was allowed to utilise approximately ₹40 crore to close a loan of Union Bank of India.
“Further, in the interim of this transaction, Ramesh Bawa (who was then CEO and MD of IFIN) also assisted a senior director in Fitch Ratings, Singapore, who appears to be involved in the rating of IL&FS, in buying a duplex villa of ₹4.25 crore at a discounted price of ₹3.25 crore,” the probe report says.
When contacted, a Fitch Ratings spokesperson said, “We are unable to comment on it.”