IL&FS fraud: Whistleblower sought to uncover it in 2017, but top-brass covered it up

Further, the investigation found that the audit committee simply went by the management version and did not inquire into the allegations made in the whistleblower complaint.

The scam at IL&FS came to light last year after several group entities defaulted on repayments due to severe liquidity problems. Later, the government superseded the board of directors, which is now working on ways to revive the ailing group.

IFIN, which has been found to be funding its own revenues for several years, was the main source of funds for the IL&FS group entities. The group had accumulated a debt burden of more than Rs 90,000 crore.

The company converted the funds of banks and public as profit with fraudulent lending activities, while the profits were also utilised for payment of managerial remuneration and dividend to the holding company.

The officials noted that the audit committee did not raise any red flag even when there were instances of "disbursal and bullet recovery of loans" on the same day or within a few days.

IFIN's lending to group companies jumped to around Rs 5,200 crore, which was 37 percent of the company's total loans and advances in 2017-18 fiscal.

The probe also found that IFIN's audit committee overlooked numerous impairment indicators and actively connived with the management to present a good picture of the company's financials to prospective investors.

According to the findings, incorrect half-yearly financial statements were of great significance as they were being used by the rating agencies for new as well as surveillance ratings. These statements were also used for market borrowings.

The SFIO has filed its first charge sheet after inspecting accounts of nearly 400 entities, an extensive forensic audit, data collected from desktops and laptops seized from various IL&FS offices as well as e-mails extracted from IL&FS servers, among other sources.