IL&FS crisis: Urjit Patel ignored whistleblower’s letters calling for probe, claims report

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First Published 11, Dec 2018, 6:44 PM IST
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Highlights

The whistleblower had sent a letter in July 2017 and had asked Urjit Patel to investigate '4 years of mismanagement, fatal financial engineering to declare dividend/show divestment & serious corruption by entire top management'

New Delhi: Urjit Patel, who resigned as Reserve Bank of India (RBI) governor on Monday, had ignored calls for investigations into Infrastructure Leasing & Financial Services (IL&FS) group's fraudulent dealings after he was sent a letter by a whistleblower.

According to Money Life website, the whistleblower, who had signed as Mahesh Inamdar, had written a three-page letter captioned, “IL&FS/IFIN: Rs1 lakh crore of PSU bank exposure at serious risk.”

Also read: Urjit Patel resigns as RBI governor citing 'personal reasons'

He had sent this letter in July 2017 and had asked Patel to investigate “4 years of mismanagement, fatal financial engineering to declare dividend/show divestment & serious corruption by entire top management.”

Not only Patel, the whistleblower had sent letters to IL&FS board of directors, State Bank of India (SBI) chairman, VK Sharma of Life Insurance Corporation (LIC), HDFC's Deepak Parekh, Abu Dhabi Investment Authority's (ADIA) Sanjeev Doshi and Orix. But all had ignored his letters. No action was taken.

Again in May this year, the whistleblower wrote one more letter to Patel, this time as Sanjay Gurukripa. It contained more details and addressed as “Extremely confidential and urgent”. It provided an updated to the affairs of the group, according to the website.

The letter said, “At (the) present speed of deterioration, IL&FS would collapse in next 12-18 months.”

The whistleblower had also alleged that credit ratings were manipulated and it was the reason for the group getting fresh funding.

LIC holds 25% equity stake in IL&FS and is the largest shareholder. The second largest shareholder is Japan's Orix Corporation with 23.5%. SBI holds 6.42%.

In October, the government acted against IL&FS and sacked its board. It appointed a new board with Kotak Mahindra Bank managing director Uday Kotak as non-executive chairman. The total debt of the group is Rs 91,000 crore.

On Monday, the National Stock Exchange (NSE) imposed fines and issued notices to as many as 60 companies, including two IL&FS group firms.

As per the NSE, IL&FS group firms - IL&FS Engineering and Construction Company and IL&FS Transportation Networks - have not submitted filings of financial results for the three months ended September 30, 2018.

(With inputs from agencies)

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