IL&FS Asks 200 Beneficiaries of Employee Welfare Trust To Refund Rs250 Crore: Report
Moneylife Digital Team 19 July 2024
Infrastructure Leasing & Financial Services (IL&FS) has sought to recover Rs250 crore from its employee welfare trust (EWT) beneficiaries in a likely first-of-its-kind move on the orders of the ministry of corporate affairs (MCA), says a report.
 
According to the report from Times of India (ToI), the move by MCA followed a report by the serious fraud investigation office (SFIO), which concluded that the entity was allegedly used for parking excess funds or profits and was subsequently used to facilitate payoffs and provide incentives to select employees.
 
Quoting officials, the report says, "Some of the alleged 'unjust payments' during FY06-07 to a select group of employees by the erstwhile management led by Ravi Parthasarthy, using the trust route, have been shared by SFIO with MCA."
 
A 2018 submission by MCA before the national company law tribunal (NCLT) revealed that top executives of IL&FS, including Mr Parthasarathy, Hari Sankaran and Arun Kumar Saha, misused EWT and "the trust deed was instituted fraudulently with criminal intention to gain unlawful benefits." 
 
The submission also exposes how the EWT was mainly used to enrich a few select employees. 
 
According to SFIO, the IL&FS EWT was used as a conduit to give shape to fraudulent motives of the key managerial persons of IL&FS."...the financial statements for the past eight years indicate that less than 1% of the total expenditure was made towards welfare of employees and the remaining was diverted towards enriching few selective employees," it says.
 
The interim report of SFIO also shows the creation of another trust, IL&FS Group Employees Trust (IGET), for which Vibhav Kapoor was the settlor and Arun K Saha and Hari Sankaran were beneficiaries.
 
While there are no documents to determine the relationship between IGET and EWT, the SFIO found that IGET aggregated all the shares held by employees and sold them to Life Insurance Corporation of India (LIC) at Rs1,100 per share. The same money was paid to employees. 
 
EWT had distributed these shares to employees at Rs84 per share (about 15 lakh shares or warrants) and Rs132 per share (around 15 lakh shares). This deal shows windfall gain and also a violation by EWT for the conditions of warrants. 
 
"While distributing the shares, the EWT had violated the conditions of the share warrants issued by IL&FS, with respect of transferability of the warrants, the condition was that the EWT cannot deal in the warrants as long as warrants were not exercised and were converted to equity shares. The trustees were in haste and even before warrants were converted to equity shares, the same were sold to employees," the SFIO report says. (Read: IL&FS Scam: SFIO Reveals How Employees Welfare Trust Was Used by Top Executives for Unlawful Benefits)
Comments
r_ashok41
2 months ago
good to hear sonething is happening here,When will they give money to customers who have invested
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