First Leasing’s ex-CFOs arrested by ED in Rs 500 crore plus bank fraud

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CHENNAI: Enforcement Directorate (ED) on Monday said it has arrested S Dilli Raj and L Sivaramakrishnan former chief financial officers (CFOs) of First Leasing Company of India Limited (FLCIL) in an alleged bank fraud case of more than Rs 500 crore.

ED officials in Delhi told TOI that the arrest was carried out late afternoon on Monday and produced before the designated court. They have been remanded to judicial custody up to August 11, 2016.

ED officials in Chennai said that the two – Dilliraj and Sivaramakrishnan admitted their role in fudging the accounts of FLCIL to obtain more than Rs 500 crore in loans from public sector banks, including State Bank of India (SBI) and IDBI Bank

In June, ED officials arrested Farouk Irani, former managing director of non-banking finance company (NBFC) First Leasing under the Prevention of Money Laundering Act and attached Rs 51 crore of property belong to Irani. ED is currently investigating industrialist A C Muthiah — who is currently not in India — over his role in First Leasing. First Leasing was founded by Muthiah and Irani in 1973.

First Leasing’s former CFO Dilli Raj currently heads Bharat Financial Inclusion Ltd’s (formerly known as SKS Microfinance Ltd) operations as its president. Bharat Financial Inclusion clarified that the arrest of Dilli Raj had nothing to do with his role in Bharat Financial. And that the current arrest related to an on-going investigation by the ED on a complaint filed by IDBI Bank Ltd against First Leasing for alleged fraud of Rs 274 crore.

“Dilli Raj had earlier issued a personal statement on October 19, 2015 that he had resigned from First Leasing on November 22, 2007 and was relieved on January 18, 2008,” said Bharat Financial in a filing on the BSE.

“All loans taken during his tenure have been repaid by First Leasing and that the complaint filed by IDBI Bank relates to loans sanctioned during the years 2012 and 2013, which was six years after he ceased to be an employee of First Leasing,” said Bharat Financial, adding “Dilli Raj also clarified that his role was confined to treasury operations and he did not authenticate or sign any financial statements of First Leasing.”

“Dilliraj was the key person up to 2007 and was involved in negotiating with the banks and also acted as CFO,” said a press release from Chennai ED officials.

“L Sivaramakrishnan took over as CFO in 2007 and was in charge of the company’s financial operations – leading to the registry of a money laundering case against the two of them,” said an ED official in Chennai. “Searches were conducted at the residential premises of Dilliraj at Hyderabad and Sivaramakrishanan, in Chennai and certain property documents were recovered.”

During the investigation it was revealed that Dilliraj and Sivaramakrishanan had “materially helped” in enriching the private coffers of Irani and his family members