The Enforcement Directorate (ED) is investigating the IL&FS Employee Welfare Trust (EWT) over possible irregularities, elongating its probe into alleged money laundering related to subsidiaries of Infrastructure Leasing & Financial Services (IL&FS).
“As much as 13.64% shareholding of IL&FS is held by the employee trust, of which the principal beneficiaries are the senior management of IL&FS, including its former CMD Ravi Parthasarathy, former director Hari Sankaran and others,” said the February 19 enforcement case information report (ECIR), which ET has witnessed. “The accused Ravi Parthasarathy, Hari Sankaran and others, in order to increase the fund base and investor base and to lure them into making investments at each stage and sub-stage, have created a myriad, complex and non-transparent structure and a web of companies which have been initially promoted by IL&FS and subsequently by those companies itself.”
ACCUSED FLOATED SHELL COMPANIES TO AWARD CONTRACTS: ED
A case under the provisions of the Prevention of Money Laundering Act (PMLA) has been registered against ILFS Rail Ltd, ILF Transportation Networks Ltd, Parthasarathy, and Sankaran.
According to the ED, the persons covered floated shell companies to award contracts and allegedly siphoned off Rs 74 crore that was used to purchase assets. The shell companies were allegedly given a commission of 0.5% of the amount routed through them. While this case deals with subsidiaries, people with knowledge of the matter stated the probe into it will widen to include IL&FS and its entire debt burden of Rs 91,000 crore.
The default by IL&FS in September roiled the markets and swamped the nonbanking finance companies (NBFC) sector, prompting the government to step in and force a change in management.
The IL&FS EWT is an unregistered entity constituted under an August 1990 indenture of trust with IL&FS as settler and Parthasarathy, former joint director and CEO Arun K Saha and DK Contractor as initial trustees.