IL&FS fire may singe names like HDFC, SBI

Mumbai: The probe into the collapse of Infrastructure Leasing & Financial Services is set to expand to include the role of marquee shareholders such as HDFC, State Bank of India and Orix Corporation.The Ministry of Corporate Affairs (MCA) is preparing the ground to probe how these shareholders and their representatives on the IL&FS board failed to flag the irregularities and deteriorating financial condition, said two people familiar with the situation. An investigation will also be conducted into the role of CARE, India Ratings and ICRA, which had given high ratings to IL&FS before the crisis.The development comes after the new IL&FS board, which took charge following the sacking of the previous board in October last year, questioned the role of shareholders in the months leading up to the crisis. The new board wanted to know why no alarm was raised despite clear deterioration in performance. “A big crisis could have been averted if shareholders had raised their voice. But they chose to remain silent,” said one of the persons.This will be the first time IL&FS shareholders will be probed for any possible lapses. 69552048 Many probes underwayInvestigations currently underway are focussing only on the alleged lapses by the former management teams at IL&FS and its subsidiaries.Life Insurance Corporation, SBI, HDFC, Orix, ICRA and India Ratings did not respond to ET’s queries. The Ministry of Corporate Affairs also did not respond to an emailed query. The IL&FS spokesperson declined to comment.CARE Ratings said it is fully cooperating with the regulatory authorities and government agencies in the matter.LIC is the largest shareholder in IL&FS with over 25 per cent stake, followed by Orix (23.5 per cent), HDFC (9 per cent) and SBI (6.42 per cent). ET could not independently ascertain if an investigation has also been ordered into LIC’s role.Several agencies are inquiring into issues such as alleged financial non-disclosures, round-tripping of funds and misgovernance. The Serious Fraud Investigation Office (SFIO) is conducting a detailed probe into the role of the previous management and has arrested Ramesh Bawa, the former CEO of IL&FS Financial Services, and Hari Sankaran, the former vice chairman of IL&FS.The SFIO is also probing the role of the auditors, including Deloitte. The Enforcement Directorate registered a criminal case under the Prevention of Money Laundering Act in February this year to probe if funds were laundered to create illegitimate assets by the accused. Investigative authorities are now probing how irregularities at IL&FS were kept under wraps for so long despite so many stakeholders being involved.

from Economic Times http://bit.ly/2XaaVcF
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