14 former directors of IL&FS charged for breach of trust

New Delhi: Tasked with cleaning up of mammoth financial mess at embattled IL&FS, its government-appointed board has charged 14 former directors of group firm IL&FS Financial Services Ltd (IFIN) of facilitating money laundering, sanctioning loans in violation of rules and causing “huge financial stress and losses” to the company.

In show-cause notices issued to the 14 former directors, the new management has charged them of having “sanctioned loans deceptively to external and group companies with sole objective to infringe RBI guidelines of excessive exposure of IFIN to intra-group companies.” They have also been accused of extending loans for “criminal intent of falsification of repayment by a number of borrowers, including some entities associated with large corporate groups.

The notices, dated February 27, have asked former directors to reply within seven days upon receipt as to why departmental and legal actions should not be taken against them for their “misconduct, dereliction of duties, gross negligence and acts of conspiracy and getting unlawful gains for oneself and others.” Officials said no reply has been received from any of the 14 noticees and the board is set to follow up the notices with stern action, which may include filing of cases.

When contacted, IL&FS (Infrastructure Leasing and Financial Services Ltd) spokesperson Sharad Goel declined to comment. The notices follow an extensive special audit ordered by the new board and conducted by Grant Thornton of crisis-hit IL&FS Group, which identified numerous financial irregularities in deals with financial implications of over Rs 13,000 crore. IL&FS Group, which operates at least 24 direct subsidiaries, 135 indirect subsidiaries, six joint ventures and four associate companies, is sitting on debt of Rs 94,000 crore and landed in a major controversy last year following multiple defaults, prompting the government to supercede its board.

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