INSUBCONTINENT EXCLUSIVE:
IL-FS directors had tried to keep many ratings in "private", push rating officials to softens ratings, even influenced them to change the
language in rating rational and occasionally inflated numbers in fishing for better ratings
The 105-page Grant Thornton (GT) report accessed by ET details out anomalies, issues of professional compromises and corporate governance
surrounding the CRAs who rated IL-FS in the last ten years.
The role of five CRAs- CARE, Icra, India Ratings , Brickwork and CRISIL have
been reviewed by GT which assigned a total of 429 ratings during the period between 2011 and 2019.
Various enforcement agencies like the
Enforcement Directorate and the Serious Fraud Investigation Office (SFIO) are probing the books of IL-FS and its subsidiary
The development comes close to the heels of the CARE Ratings, MD - CEO, Rajesh Mokashi and Managing Director and Group CEO of ICRA Naresh
Takkar sent on leave after anonymous complaint received by Sebi
downgrade in credit ratings
In cases if the favorable ratings were not obtained, the former employees of IL-FS were paying huge sums to keep ratings private.
An email
dated 30 January 2018 was sent by Mic Kang -representative of Moodys to Dilip Bhatia providing him with the rating letter for ITNL
This was further shared by Dilip Bhatia with the KMPs for IL-FS, where he suggested that rating from Moodys should be kept in private domain
and requested Anita Ferreira to check the cost for the same
The fee for any particular rating is the same regardless of whether the rating is public or private, and ongoing monitoring of the rating is
report and expect the report to be corrected accordingly.
The report says that given the liquidity stress in ITNL, it is unusual to note
that significant amount $68000 was offered to Moodys to keep the ratings of ITNL in private domain
This amount was paid over and above $91,000 upfront fees paid for rating with one year validity.
In 2013, a mail was sent by Ajay Menon to
Sujoy Das informing him that an investor of commercial papers had requested ITNL to get credit ratings from Brickworks
Further, in the trail email Sujoy Das informs Arun Saha about the proposal of Ajay Menon and states that ratings will be kept private if
highest short-term rating is not given by Brickworks.
INFLATE FORECAST An email communication between the erstwhile IFIN director and a
senior employee at ITNL indicates that inflated projections were submitted to CRISIL in order to get good ratings
However, the same was indicated as Rs
ratings were not going to be favorable, they then either delayed the process of rating surveillance or delayed the publication of the rating
appears to suggest that the conclusion of the rating rationale provided by the India Ratings should be softened/less harsh
Thus,it indicates that IL-FS may have been able to potentially influence the wordings/rationale of India Ratings, its concludes.
RATING
SHOPPINGCiting how the alleged accused IFIN directors used pressure to get favourable ratings, the GT report cites an email dated August 12,
This step was ICRA was not agreeable to Ramesh Bawa
Further, in the trail email Parthasarathy suggests that they can approach CARE, FITCH as well as CRISIL for the ratings instead of ICRA
Thus, the email trail suggest that key former employees of IL-FS used to approach other rating agencies if they did not get the desired
MCA MULLING ON A FRAMEWORK FOR CRAs
Sources says the ministry of corporate affairs (MCA) may write to the regulators to tighten the framework so as to regulate the CRAs
Credit rating agencies are jointly regulated by both Sebi and RBI as these firms rate bank loans and NBFCs, which constitute 70 per cent of