India's fraud investigator arrests ex-chairman of debt-laden IL&FS

IL&FS Transportation Networks

01/04/2019 19:35

April 1 (Reuters) - India's Serious Fraud Investigation
Office (SFIO) has arrested the former chairman of debt-laden
Infrastructure Leasing and Financial Services (IL&FS) in
connection with an ongoing investigation into the lender, a
government official said on Monday.
    Hari Sankaran, the former chairman and managing director of
IL&FS, was arrested for "abusing his powers in IL&FS Financial
Services Ltd through his fraudulent conduct" and will be in
SFIO's custody until April 4, the official told Reuters on
condition of anonymity.
    IL&FS, a major infrastructure financing and construction
company, has a total debt of 910 billion rupees ($12.97 billion)
and has been trying to sell its assets to repay debt after
several defaults forced the government to overhaul its
management.  urn:newsml:reuters.com:*:nL4N1WH20Z
    Sankaran granted loans to entities, which were not
creditworthy or have been declared non-performing assets,
causing wrongful loss to the company and its creditors, the
official added.
    IL&FS could not be immediately reached for comment.
    IL&FS Financial Services had borrowings of more than 170
billion rupees ($2.46 billion) from debt instruments, bank loans
and other investment firms, the official said.
    A third of the total outstanding loans by a unit of IL&FS to
borrowers were either unsecured or had inadequate collateral, a
Grant Thornton India audit of the firm reported last month. 
 urn:newsml:reuters.com:*:nL3N20R3DY
    Bad loans at Indian banks reached a record $150 billion at
the end of March, with state-run banks accounting for the lion's
share. The huge pile of bad debt has hurt the bottom lines of
state-run banks and hindered their ability to issue new loans. 

    ($1 = 69.1810 Indian rupees)

 (Reporting by Sathvik N in Bengaluru & Aftab Ahmed in New
Delhi, Editing by Sherry Jacob-Phillips)
 ((Sathvik.N@thomsonreuters.com; +1-646-223-8780, outside
N.America, +91-80-6749-2783; Reuters Messaging: Reuters
Messaging: Sathvik.N.thomsonreuters.com@reuters.net))