Mumbai

Sankaran was ‘benefiting’ from the gains of performance perks

Former vice-chairman of IL&FS Hari Shankaran (right) who was arrested by SFIO on grounds of misusing his power, was produced at Esplanade Court on Thursday.

Former vice-chairman of IL&FS Hari Shankaran (right) who was arrested by SFIO on grounds of misusing his power, was produced at Esplanade Court on Thursday.   | Photo Credit: Emmanual Yogini

He is first top official of IL&FS to be placed under arrest

A Mumbai court on Thursday extended the police custody of former vice chairman and managing director of IL&FS Hari Sankaran, arrested on Monday by the Serious Fraud Investigation Office (SFIO) in connection with the massive fraud at the company, till April 18.

The first top official of the troubled firm to be placed under arrest, Mr. Sankaran gained from performance-linked salaries and other perks ‘fraudulently funded from public resources without actually indulging into any gainful activity’, the SFIO argued before the metropolitan magistrate court at Esplanade on Thursday.

“The company’s core business is a combination of debt syndication, corporate advisory, corporate lending and investment,” SFIO’s counsel Hiten Venegavkar said, adding that the 58-year-old Mr. Sankaran was a key official managing its day to day affairs.

“The intent of the management was postponement/avoidance of the recognition of the loan asset as a non-performing asset [NPA] and thereby, avoid consequent provisioning as mandated by the Reserve Bank of India [RBI],” the SFIO submitted to the court, explaining that such provisioning for bad loans would have dented the firm’s performance, rating and ability to borrow.

“...Such fraudulent transactions led to the projection of high asset quality, recognition of high revenue, suppression of NPA and provisioning for NPA and led to show a rosy picture of the financial statements,” the SFIO said.

Conflict of Interest

The agency also questioned a ₹175 crore loan given to controversial businessman C. Sivasankaran, who has close personal relationships with Mr. Sankaran. The loan, it was argued, was granted despite internal resistance at ILFS, ignoring an earlier ₹500 crore loan from the Sivasankaran group entities that had not been recovered.

“The said act of fraudulently funding the defaulting borrowers, indiscriminate lending to borrowers classified as NPA (where RBI had instructed to provide for provision for years) was conducted intentionally, in spite of being informed and aware of the factual position, legal constraints, risks to the company. The said acts have been committed by Mr. Sankaran to injure the interests of the company and its creditors,” the SFIO concluded in its plea.

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Printable version | May 28, 2020 8:23:24 AM | https://www.thehindu.com/news/cities/mumbai/sankaran-was-benefiting-from-the-gains-of-performance-perks/article26738852.ece

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