The Enforcement Directorate (ED) on Wednesday carried out searches against two former auditor firms of Infrastructure Leasing and Financial Services Limited (IL&FS) in connection with money laundering and financial irregularities.
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IL&FS had filed for bankruptcy in 2018. The auditors are currently with BSR and Associates and Deloitte Haskins and Sells. Their premises in Mumbai were searched under the provisions of the Prevention of Money Laundering Act (PMLA), they added.
The Central agency swung into action a week after the Supreme Court set aside a Bombay High Court verdict that quashed a probe by Serious Fraud Investigation Office against the two companies, leading to action against them under the Companies Act and allowing the National Company Law Tribunal (NCLT) to take its enquiry forward against them.
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In 2019, the ED had taken cognisance of a First Information Report by the Delhi Police Economic Offences Wing filed against IRL, ITNL (group companies of IL&FS), its officials and others. It had then attached assets of various entities in this case.
Soon thereafter Hari Sankaran, 66, former vice chairman of IL&FS and Ramesh Bawa, 58, former managing director and chief executive officer of IL&FS were arrested by the SFIO in April 2018. They are currently out on bail.
The SFIO had claimed that IFIN extended loans to external parties, many of which had already begun defaulting. The agency claimed that the top management knew of the probable stress because of the loan defaults.
The IFIN management adopted “fraudulent practices” to not let these loans or credit facilities be classified as non-performing assets, violating many guidelines set by the Central bank, the SFIO stated in the complaint.