Probe Agency Searches 2 Former IL&FS Auditors In Money Laundering Case

The Enforcement Directorate on Wednesday carried out searches against two former auditor firms of IL&FS -- BSR and Associates and Deloitte Haskins and Sells -- in connection with its money laundering probe into alleged financial irregularities at the infrastructure development and finance company, official sources said. The premises linked to the two auditors in Mumbai were searched under the provisions of the Prevention of Money Laundering Act (PMLA), they added.

Some employees of the two companies -- Deloitte Haskins and Sells and BSR and Associates, an Indian affiliate of global auditing firm KPMG -- were also questioned by the officials during the searches even as documents were seized.

"This routine inquiry is in respect to an ongoing matter regarding a former client and we continue to extend our full cooperation to the authorities," an spokesperson for Deloitte said.

The action came a week after the Supreme Court set aside a Bombay High Court verdict that quashed an SFIO probe against the two companies, both former auditors of IL&FS Financial Services, paving the way for action against them under the Companies Act and allowing the National Company Law Tribunal (NCLT) to take forward its enquiry against them.

The Infrastructure Leasing and Financial Services Limited (IL&FS) filed for bankruptcy in 2018.

The Serious Fraud Investigation Office (SFIO) is an agency under the Ministry of Corporate Affairs that investigates and prosecutes white collar crimes and frauds.

The money laundering probe into the alleged financial irregularities at IL&FS was launched by the Enforcement Directorate (ED) in 2019 after the federal agency took cognisance of a Delhi Police Economic Offences Wing (EOW) FIR filed against IRL, ITNL (group companies of IL&FS), its officials and others.

The Enforcement Directorate also took cognisance of a complaint filed by the SFIO against IL&FS Financial Services (IFIN) and its officials.

The Enforcement Directorate had also attached assets of various entities in this case in the past.

Arun Kumar Saha, one of the former members of the committee of directors of IFIN, and Karunakaran Ramchand, former managing director of ITNL, were arrested by the Enforcement Directorate, which subsequently filed a charge sheet before a special PMLA court in Mumbai.

The Enforcement Directorate, alleged in the charge sheet, that the senior management of IL&FS indulged in acts of commissions and omissions, leading to illegal personal gains to them at the expense of the company.

The Enforcement Directorate had said in order to maintain the credentials of IFIN -- so that they could continue to receive high remuneration -- the directors allegedly falsified the accounts and indulged in "circuitous transactions" to artificially boost the balance sheet of the IL&FS group, whereas in reality, these illegal activities were leading to further losses to the group.

According to records, the IL&FS group companies had an aggregate debt burden of more than Rs 91,000 crore and a series of defaults had taken place between June and September in 2018, threatening to collapse the money markets of India.

This had led to initiation of action against the firms and their auditors.

The Union government took the management control of IL&FS and appointed a new board in October 2018 in an effort to control defaults and restore confidence and financial stability in capital markets.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)