New Delhi, June 1: Did political patronage allow the IL&FS secret society to indulge in abashed and shameful abuse of power for years and years is a question that now has some answers. The damning Ministry of Corporate Affairs action expected to be taken report submitted (May 29, 2019) to SFIO on the basis of their overarching investigation is not just damning but extremely damaging for it reveals the extent of the all pervading malfeasance. More than that the investigative series which alluded to widespread cronyism and wilful abuse of power has been confirmed with great detailing and to the last minutiae.
Validating the hypothesis that the closed user group openly curried favour in a brazen case of cronyism, the report goes on to say that the management led by Ravi Parthasarathy and Hari Sankaran ran the shadow bank like a personal fiefdom — “It is revealed that Ravi Parthasarathy and Hari Sankaran took hospitality from maverick businessmen and owner of Sterling Group C. Sivasankaran and used IL&FS group as their personal fiefdom to provide these wrongful gains to Sivasankaran illegally and by violating all the norms and policies of RBI and the company itself.
The probe also revealed that IFIN (IL&FS Financial) being an NBFC was regulated by the guidelines and directions of the RBI. The lendings to group entities was governed by the credit concentration norms for the group entities and also the computation of net owned fund (NOF) wherein it was stipulated that if the exposure to a group entity is in excess of 10 per cent of NOF then the same was required to be deducted from NOF computation.
However, investigation revealed that the lending of WIN to its group
companies increased significantly from the Financial Year 2012-13 onwards, with the lending percentage crossing double digits to 15 per cent of total loans and advances in the year. In the subsequent years, it continued increasing and more than doubled to around Rs 5,200 crore, i.e. 37 per cent of total loans and advances in FY 2017-18.
Furthermore the probe revealed that loans were approved by management of the IFIN (A2-A9) for Siva Group of Companies. It is revealed that the said
lending to Siva Group was approved fraudulently in furtherance of
the connivance with C. Sivasankaran (A13), who was the controlling will
and mind of all his group entities/Siva Group and he had close relationship with Ravi Parthasarathy (Accused 2) and Hari Sankaran (A3).
Investigation revealed that the management of IFIN abused their
position by giving the loans to Siva Group of Companies as some of the
companies of Siva Group had failed to repay the earlier loans granted
to them by WIN. In the said process, interest of the IFIN was injured
as wrongful loss was caused to the Company and loan amount to the Siva
Group could not be recovered. It also caused wrongful gain to C.