Police raids IL&FS’ offices as money misuse investigation kicks off

Delhi’s financial investigation agency is looking into possible “money siphoning” by the cash-strapped firm.

India’s anti-financial crime agency raided six offices from the troubled infrastructure firm IL&FS yesterday, as part of an investigation over possible misuse of funds.

“We will be examining if there has been any syphoning of funds,” Subhendu Parhi, Assistant Director of India’s Enforcement Directorate, a financial investigation agency under the Ministry of Finance, told Infrastructure Investor.

Parhi said investigators will look into the loans issued by the company, without providing more details.

IL&FS, which owes 910 billion rupees ($12.7 billion; €11.2 billion), defaulted on several payments in August, and is currently facing legal disputes from its creditors in India’s National Company Law Tribunal.

According to Parhi, the ED is investigating the operations of the company between 2010 and 2018, but the investigation is still “at a preliminary stage”.  The ED has seized approximately 600,000 rupees in foreign currency from the company’s office.

IL&FS declined to comment on the situation.

Local media reported that the investigation was kicked off by complaints about possible misuse of funds by Enso Infrastructures, an investor on IL&FS’ subsidiary IL&FS Rail. Parhi declined to comment on whether the ED investigation will focus on IL&FS Rails or will target the overall operations of the firm.

Enso Infrastructures did not reply to phone calls seeking comment.

IL&FS is currently undergoing a resolution plan that involves the sale of several of its verticals to repay part of its debt.

Parhi did not provide details on whether the investigation might impact the company’s current divestment plans.

IL&FS has also been under investigation by the Serious Fraud Investigation Office, a corporate fraud agency under India’s Ministry of Corporate Affairs.

The company was founded in 1987 as an infrastructure financier, but since then has expanded to become one of India’s largest infrastructure conglomerates, holding a network of 347 affiliated entities, according to company’s documents.

The firm holds a massive portfolio of infrastructure assets in India, including 10,800 kilometres of roads that are already operational; maritime and logistics facilities valued at more than $2 billion; and 840 kilometres of power transmission lines, according to their 2016-17 annual report.