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ICRA and CARE sent their CEOs on leave post several anonymous complaints filed against them to SEBI

Credit rating agencies like Investment Information and Credit Rating Agency (ICRA) and Credit Analysis and Research (CARE) have sent their Chief Executive officers on leave this month. The CEO’s are on holidays in spite of the fact that investigations against them are pending yet. Serious Fraud Investigation Office or SFIO has given the task to probe the role rating agencies by the Ministry of Corporate Affairs (MCA).

As per the reports the MCA has asked to probe the role of the CEO’s and Credit rating agencies in the fraud so alleged in various companies. One of those companies is Infrastructure Leasing and Financial Services Ltd (IL & FS) group of companies.

It was quoted by CNBC-TV18 that a minister reportedly said that Serious Fraud Investigation Office is now looking into the serious matter with governance framework and feasible personal misconduct.

Further, it was reported that SFIO is probing governance matters such as rating a corporate based on the credit profile of its parent company. SFIO is also looking into the issues related to revising the rating with mala-fide intention.

It was discovered by the ED short for Enforcement Directorate that the top-level management of Infrastructure Leasing and Financial Services Ltd (IL & FS) group of companies had interfered in the firm’s rating reviews by seeking their up-gradation on many occasions.

As per the statement of Enforcement Directorate, while tampering with the rating reviews of IL & FS group of companies, the rating agencies did not take into account the undertaking’ actual financial stress.

As per the statement made by the investigators of Enforcement Directorate, the senior managers of Infrastructure Leasing and Financial Services Ltd (IL & FS) group of companies namely, Ravi Parthasarathy, Arun Saha, and Hari Sankaran were engaged in talks with the credit rating agency ICRA’s team to get their “desired results”.

When ICRA sent its managing director and Chief Executive Officer Naresh Takkar on leave earlier this month, the news made a hussle amongst the people. Several anonymous complaints were filed to Securities and Exchange Board of India (SEBI) alleging ICRA’s high rating of AAA to IL & FS in 2018.

After the complaints were entertained by the SEBI, it took action against the agency. Likewise, other credit rating agency CARE has also sent its managing director and chief executive Rajesh Mokashi on leave after similar complaints to SEBI.

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