Former IL&FS Chairman Ravi Parthasarathy Arrested In Rs 1 Lakh Crore Scam

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Former IL&FS Chairman Ravi Parthasarathy Arrested In Rs 1 Lakh Crore Scam

The Economic Offences Wing said that the group was used as a "vehicle to perpetrate fraud" by Parthasarathy.

On June 11, the Economic Offences Wing (EOW) of Chennai police detained Ravi Parthasarathy, the former group chairman of Infrastructure Leasing & Financial Services (IL&FS), in relation to the suspected 1 lakh crore fraud which led to a liquidity crisis in financial services market in 2018.

"The kingpin and the mastermind of the 1 lakh crore IL&FS scam Mr. Ravi Parthasarathy have been arrested by EOW in connection with Crime No.13 of 2020 dated 20.09.2020," said a statement issued by EOW Chennai.

According to the statement, the IL&FS group, which encompasses around 350 companies was manipulated as a "vehicle to perpetrate fraud" by then-management of the group, spearheaded by then-chairman and MD CEO Ravi Parthasarathy.

The FIR was filed in response to a complaint put forward by 63 Moons Technologies Ltd, which claimed to have lost 200 crore, according to EOW Chennai. The statement also sheds light on complaints by several other depositors.

The chief architect of the scam, Parthasarathy, has been taken into police custody for 15 days and is expecting a bail hearing on June 14.

Earlier, the Madras High Court had denied the accused Parthasarathy's anticipatory bail plea.

The IL&FS crisis erupted in July 2018, when the business began defaulting on its loan repayments. When it started defaulting on bonds that were due to investors in August 2018, the firm crumbled.

By the time the group's financial issue became known, the firm, which began as a road construction financing firm, had discreetly grown to approximately 347 subsidiaries and had acquired a debt load of over 91,000 crore. The non-banking financial company (NBFC) continued to roll over securities until everything came to a standstill. Rating agencies, experts and regulators waited until the last possible minute to take action.

When IL&FS eventually began to fail on its obligations to institutions, it instigated fear in the financial markets. In October 2018, the Central government planned to control IL&FS through a directive by the National Company Law Tribunal (NCLT) and established a panel led by senior banker Uday Kotak to begin the IL&FS resolution process. At the new board's first AGM late last year, Kotak stated that the new board hopes to collect at least half of the 90,000 crore debt on IL&F through resolution. That project is still ongoing.

The Government of India (Gol) in its petition stated, "Ravi Parthasarathy and his team were responsible for the negligence, incompetency and misleading the public by presenting rosy financial statements. IL&FS was camouflaging its financial statements by hiding a severe mismatch between its cash flows and payment obligations. vas also hiding total lack of liquidity and glaring adverse financial," reported The Times of India.

The new IL&FS management claims to have paid off 43,000 crore in total group debt so far through asset sales and other cash receivables.

In addition, as part of its quarterly update on the status of the current group resolution process, the business revealed on April 15 that it had boosted the debt recovery objective to 61,000 crore.

According to MoneyControl News, as of October 2018, 186 of the 347 organisations under the IL&FS Group had been resolved, while the remaining 161 were in different stages of resolution.

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