In first arrest in IL&FS case, former chairman Hari Sankaran taken into custody until April 4

The Serious Fraud Investigation Office (SFIO) on April 1 arrested Ex-Chairman of IL&FS Hari Sankaran in connection with the ongoing investigations into the affairs of IL&FS and its group entities.

Sankaran has been granted SFIO custody until April 4.

Sankaran has been arrested on the grounds of abusing his powers in IL&FS Financial Services through his fraudulent conduct and granting loans to entities that were not creditworthy or have been declared non-performing assets (NPAs) thereby causing wrongful loss to the company and its creditors, according to SFIO statement.

IL&FS Financial Services had borrowings of over Rs 17,000 crore from debt instruments and bank loans. Provident funds, pension funds, gratuity funds, mutual funds, public and private sector banks, are among those who have invested in these debt instruments.

This was the first arrest in the IL&FS case.

Enforcement Directorate (ED) is investigating the alleged money laundering of Rs 2,364 crore from the books of IL&FS Financial Service Limited (IFIN), identified in a forensic audit performed by Grant Thornton.

Moneycontrol has reviewed the interim Grant Thornton report which was submitted to the new board of IL&FS on February 20.

The ED is investigating instances where funds lent to borrowers of IFIN, were utilised to provide funds to certain group companies of IL&FS (primarily ITNL). Based on the unapproved minutes of the IL&FS board meeting held on September 11, 2018, it appears that the then Board of Directors and certain members of the board who were part of the Committee of Directors were allegedly aware that the loans provided to third parties had been forwarded or lent to IL&FS group companies.