From the Economic Times of India: It looks like heads have finally begun to roll in the real sense in the IL&FS fraud case, the mammoth Rs 91,000-crore scam that caught India unawares a few months ago the after-affects of which are still being felt in many spheres.
Serious audit irregularities in IL&FS accounts have prompted the Ministry of Corporate Affairs to set sleuths on the trail of Deloitte.
Last week, the former CEO of Deloitte was put to a grilling question session by the Serious Fraud Investigation Office (SFIO) on the alleged misconducts and misdemeanors in the IL&FS case.
The investigation is being put on fast track following a whistleblower letter sent to the SFIO recently. According to reports by new agency IANS, a lengthy India ban — as much as 5 years — now stares at Deloitte, one of the much-vaunted Big 4.
If that happens, it will be the second such ban after that of Price Waterhouse, which was debarred in India over the Satyam scam.
IL&FS scam revisited
The Infrastructure Leasing & Finance Services is the holding company of the IL&FS Group. Its operations, domiciled in a number of separate companies, make for an ecosystem of expertise across businesses such as infra, finance, and social & environmental services. IL&FS was founded in 1987 with equity from Central Bank of India, Unit Trust of India and Housing Development Finance Co to fund infra projects at a time when its peers were focused mainly on corporate projects.
The mess came to light after IL&FS Financial Services — one of the group companies — defaulted on servicing bank loans (interest included), term and short-term deposits. It also failed to meet the commercial paper redemption obligations due in mid-September last year.
On September 15, the company reported that it had got notices for delays and defaults in servicing some of the inter-corporate deposits accepted by it. Subsequent to these defaults, ICRA downgraded its short-term and long-term borrowing programmes.
The defaults put a great many investors, banks and MFs associated with IL&FS in danger, sparking huge panic among equity investors.