In addition to prosecution of former executive and independent directors of IFIN, among others, and attachment of their properties, the SFIO is also looking to seek interim attachment of all moveable and immovable assets of the auditors including their lockers, bank accounts and jointly-held properties, officials said.
The SFIO is also collecting details about all borrowings by IFIN from banks and through market instruments, as also about the role of banks and their officials and of credit rating agencies.
The first charge-sheet, filed by the government's white-collar fraud investigation agency, follows inspection of accounts of close to 400 entities, an extensive forensic audit, data collected from desktops and laptops seized from various IL&FS offices as also e-mails extracted from the IL&FS servers, RBI inspection reports, minutes of meetings, among other documents, as also the assessment reports from the government-appointed new board of IL&FS.
The huge scam came to light last year after IL&FS and its subsidiaries defaulted on several debt repayments due to a severe liquidity crisis. As of March 2018, it owed over Rs 90,000 crore to banks and other creditors. The government in October last year superseded the board of IL&FS and appointed a new board, with eminent banker Uday Kotak as its executive chairman.
In its chargesheet filed before a special court in Mumbai last Friday, the SFIO has accused 30 entities/individuals of various violations and offences, including of financial fraud. Some of the accused persons are already in judicial custody.
The former top-management members of IFIN have been charged with committing fraud with intent to injure the interest of the company, its shareholders and creditors, resulting in wrongful loss to the company.
They have been accused of forming a "coterie to control day-to-day affairs of the company and of colluding with others" in using illegal methods on multiple occasions in violation of the RBI directions.
They have also been accused of conniving with some borrowers to help them make wrongful gains in the form of loans with the intention of not repaying the same.
It has further alleged that statutory auditors of the company also colluded with the top management of IFIN and fraudulently falsified the books of accounts and the financial statements from the fiscal year 2013-14 to 2017-18.
The members of the audit committee also connived with the 'coterie' and overlooked the violations of norms, causing unlawful loss to the company.
The 'coterie' repeated its modus operandi several times by getting an earlier loan facility for a borrower closed and creating a fresh facility, which was again funded after default with another funding cycle through the same or another group entity. Ultimately, the final loan facility was declared an NPA or written off, while several of them remain outstanding resulting in the ballooning of debt.
The 'coterie' members abused their position, connived with auditors and others to defraud the company by devising an "illegal strategy" of lending money to group companies
of IFIN by funding to vendors and contractors of another group firm.
The top management members also "deliberately presented falsified, spruced up, deceptive and misleading" financial statements to the credit rating agencies, who continued to give them the highest ratings till the later part of 2018, the SFIO has charged.
Listing names of Deloitte Haskins and Sells LLP and BSR and Associates LLP in the chargesheet, the SFIO said, "The statutory auditors failed to discharge their duties diligently and did not use professional scepticism to ensure true and fair disclosure of the state of affairs of the company".
"They, in fact, colluded with officials of the companies
in order to conceal their fraudulent activities," the SFIO said while citing documentary and digital evidence as also relevant portions from its investigation report about statements recorded during the course of the probe.
The probe agency said the financial statements prepared and filed by the company did not give a true and fair view of the state of affairs at the company, while the financial statements for the fiscal years from 2010-11 to 2017-18 were not in compliance with the applicable accounting standards.
One of the directors did not disclose his interest in a borrower company which had his wife and daughter on the board.
The 'coterie' identified by SFIO included Ravi Parthasarthy, Hari Sankaran, Arun Saha, Ramesh Bawa, Vibhav Kapoor and K Ramchand, who were in the top management of various IL&FS firms.
SFIO said its probe revealed that IFIN, as an NBFC, extended loans to companies
of Siva, ABG, A2Z, Parsvnath and other corporate groups, though a number of them were not servicing their debt obligations timely.
The 'coterie' was aware of the potential problematic accounts, as flagged by the company's internal systems, but kept on getting loans extended to other companies of the same borrower groups, it added.