ED raids Premises of Two Former IL&FS Auditors in Money Laundering Case

The Enforcement Directorate (ED) searched the offices of two former IL&FS auditors as part of its money-laundering investigation into suspected financial irregularities at the infrastructure development and finance business.

According to reports, which cited authorities, the ED conducted searches at the offices of BSR and Associates and Deloitte Haskins and Sells in accordance with the requirements of the Prevention of Money Laundering Act (PMLA).

This occurred barely a week after the Supreme Court overturned a Bombay High Court decision that had halted an SFIO investigation into the two businesses, clearing the door for action under the businesses Act and allowing the National Company Law Tribunal (NCLT) to proceed with its investigation.

In 2018, Infrastructure Leasing and Financial Services Limited (IL&FS) declared bankruptcy. The Serious Fraud Investigation Office (SFIO) is a government organisation that investigates and prosecutes white-collar crimes and frauds.

The ED launched the money-laundering investigation into suspected financial irregularities at IL&FS in 2019 after taking cognizance of a Delhi Police Economic Offences Wing (EOW) FIR filed against IRL, ITNL (IL&FS group firms), its officers, and others. The ED also took notice of the SFIO’s allegation against IL&FS Financial Services (IFIN) and its executives.

In the past, the ED has attached assets of several entities in this matter.

The ED detained Arun Kumar Saha, a former member of IFIN’s committee of directors, and Karunakaran Ramchand, a former managing director of ITNL, and later filed a chargesheet before a special PMLA court in Mumbai.

According to ED, IL&FS’s senior management engaged in acts of commissions and omissions, resulting in illicit personal profits at the expense of the firm.

As per ED, in order to keep IFIN’s credentials and continue to receive high remuneration, the directors allegedly falsified the accounts and engaged in “circuitous transactions” to artificially boost the IL&FS group’s balance sheet, despite the fact that these illegal activities were causing further losses to the group.

According to reports, the IL&FS group firms had a total debt load of more than Rs 91,000 crore, and a series of defaults occurred between June and September of 2018, threatening to bring India’s money markets to a halt. As a result, legal action was taken against the companies and their auditors.

In an effort to limit defaults and restore trust and financial stability in capital markets, the Union government assumed managerial control of IL&FS and named a new board in October 2018.