IL&FS' Final Audit Exposes Web Of Corruption, Shady Loans.
Last week, one of the largest auditing firms in India, Grant Thornton submitted its forensic audit report onIL&FS to the board of the company. In a shocking revelation there were 107 instances which were discovered in the report of loan evergreening, loans given without proper collateral and management links with other borrowers companies.
The former managing director of IL&FS , Ramesh Bawa did not disclose his investments in AAA Infosystem and AAAB Infrastructure. This is a non-compliance according to the provisions of the Companies Act as per the act all the directors have to disclose their investments in the other firms.Bawa was arrested by the Serious Fraud Investigation Office (SFIO) in April. Indirect links were found between Silverglades Group and Ansal Group, which were provided loans exceeding upto almost 500 crore. It was discovered that Silverglades was given loans by the former director. The other companies which were found to be linked to the ever greening process were Essar, DB Realty, SKIL, Gayatri Group, Siva, SREI, Kohinoor, Parsvanath and HDIL.
The Director had approved the loans of firms in which 73 instances of negative assessment were found. In 2017, the RBI had instructed IFIN to reduce its exposure to group companies and not provide fresh lending, however this was violated by IFIN. The audit report also states that, 14 external companies had borrowed money and transferred to IL&FS group companies. Sangam Group among others borrowed twice and transferred the money to IL&FS. Further violating RBI guidelines, IFIN is said to have purchased shares with a cumulative worth of Rs 733 crore. Additiionally, 20 instances where loans were given to companies with a total worth of Rs 1,827 crore without any security from borrowers was discovered in the audit report. It also found 17 instances of loan disbursements worth Rs 1,941 crore, where securities fell short in comparison to the sanctioned amount was also found, leading one to believe that there existed gross violations of the provision of the Act.