BackGovt to move court to disgorge assets of errant IL&FS officials
NCLT has allowed the government to restrain nine former top officials of IL&FS from disposing of their assets
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New Delhi: The government will move the National Company Law Tribunal (NCLT) to disgorge the assets of errant managers in the distressed Infrastructure Lease & Financial Services Ltd (IL&FS). The idea is to recover what the ministry of corporate affairs regards as unjust money that senior officials in the company made by way of managerial remuneration when group entities were struggling to stay afloat.
Profiting by remuneration that is not in sync with the financial performance of IL&FS was not justifiable, said a government official on condition of anonymity.
The ministry will seek disgorgement of the “excessive executive pay" that nine senior officials have made. “It’s daylight robbery," said the official quoted above.
The Mumbai bench of NCLT on Monday allowed the government’s interim plea to restrain nine erstwhile top officials of IL&FS from disposing of their personal assets, Mint reported on Tuesday. They are also restrained from borrowing against their assets, which will create third party rights on them. The tribunal will hear the matter next in January. The decision was based on the findings of an interim report by the Serious Fraud Investigation Office (SFIO) on the mismanagement of IL&FS that the ministry presented to the tribunal.
The scope of disgorgement of ill-gotten wealth will be expanded if investigation reveals fraud involving other officials in the infrastructure lender, said the person quoted above. At present, the effort will be to disgorge around ₹ 450 crore, said the person.
The SFIO probe had found that IL&FS had given loans of more than ₹ 400 crore to an employee welfare trust that primarily benefited a few managerial employees. The government reckons that the affairs of the group were run in such a way that the losses of subsidiaries were dressed up so that managerial remuneration, which is capped at 11% of a company’s net profits, did not affect executive pay disbursal.
The state-appointed board of IL&FS led by Uday Kotak is now exploring ways to turn around the company, mainly by way of asset sales. The company has received more than a dozen expressions of interest for acquiring stakes in subsidiaries IL&FS Securities Services Ltd and ISSL Settlement & Transaction Services Ltd, the company said in November.
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