IL&FS case: Senior management swayed ICRA ratings; asked it for 'desired things', finds ED

As per ED's investigators, then senior management of IL&FS comprising Ravi Parthasarathy, Arun Saha and Hari Sankaran used to engage in talks with ICRA's analyst team to get desired things.

By BusinessToday.In  
Friday, July 19, 2019

The Enforcement Directorate (ED), which is probing the IL&FS case, has discovered that the now-bankrupt company's senior management interfered in IL&FS group firms' ratings review seeking their upgradation on many occasions. While the rating agencies did alter the ratings of several companies, they did not take into account the undertakings' financial stress, the ED found.

The probe agency's findings indicate towards a lack of checks and balances, the Business Standard reported. ED is reviewing the role of credit rating agencies regarding the IL&FS money laundering case.

As per the ED's investigators, then senior management of IL&FS comprising Ravi Parthasarathy, Arun Saha and Hari Sankaran used to engage in talks with ICRA's analyst team to get "desired things", the report said.

Also Read:India's CARE Ratings sends CEO Rajesh Mokashi on leave pending inquiry

"We have observed that the IL&FS brass had asked for a review of the ratings on multiple occasions. It is pertinent that in the financial year 2012 and 2013, when IFIN was doing well, the rating was AA and when there was liquidity crunch in IFIN in fiscal 2019, the rating was reviewed to AA+," an ED official told the news daily.

Three eminent credit rating agencies, Moody's subsidiary ICRA, CARE Ratings, and Fitch Ratings' wholly-owned subsidiary India Ratings and Research, had granted AAA rating to IL&FS, which points towards the highest level of creditworthiness.

These ratings were there when its subsidiary IL&FS Transportation Networks defaulted in June last year. Whereas, IL&FS was downgraded to D rating in August, which made the company's debt junk. Meanwhile, both ICRA and CARE have asked their MD and CEO to go on indefinite leave pending an enquiry against them in the matter.

Also Read: ICRA sends MD and CEO Naresh Takkar on indefinite leave over IL&FS rating concerns

"The board of directors of CARE Ratings has decided, pending the completion of the examination of anonymous complaint received by the SEBI, to place Rajesh Mokashi, on leave, with immediate effect, until further notice," Care Ratings had said in a filing to the Bombay Stock Exchange.

"Pending the completion of the examination of the concerns raised in the anonymous representation that was forwarded to the company by Sebi, the board decided to place Naresh Takkar on leave, effective immediately," ICRA had also said in its regulatory filing.

In the course of the ED interrogation, ICRA claimed that it was unaware of the funding of IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL) through third party. According to the report, ICRA told ED that it did not know about the prohibitions enforced by the Reserve Bank of India (RBI). While asserting that it did not have any knowledge about the dilution of collateral securities, ICRA told the ED that the IFIN management claimed that it had sufficient collateral against the exposure, the report stated.

Also Read:IL&FS Fraud Case: Six Probe agencies train guns on auditors Deloitte, BSR

Also Read:ED grills former top officials of IL&FS in money laundering case

Also Read: ED carries out fresh raid at premises of 4 directors of IL&FS in Mumbai

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