As a new layer of the IL&FS mess gets exposed every other day, Grant Thornton’s forensic audit report now suggests that IL&FS Transportation Networks Ltd’s (ITNL) current CEO, Dilip Bhatia, was among the decision-makers in terms of rating changes of the company and very much tried to conceal unfavourable ratings accorded by credit rating agencies.

The IL&FS Group company might have been in financial stress, but Bhatia was ready to shell out huge sums of money to keep the not-so-conducive ratings and outlooks away from public gaze, the audit report of the IL&FS Group’s rating agencies showed.

The e-mail trail between Bhatia, who was then the Chief Financial Officer, and other IL&FS officials shows that he was ready to pay $68,000 to Moody’s for keeping its rating assessment for ITNL private.

On January 30, 2018 Moody’s sent its rating letter to Bhatia, following which he, in a mail dated January 31, 2018 to IL&FS executives Anita Ferreira and Sujoy Das, said: “My view is that we keep this rating in private domain for some time (Anita to check the cost and time we can retain the same). This will help us activate the same at short notice should there be positive trigger in ITNL on business or financial front.”

Ferreira on February 5, 2018 wrote back to Bhatia, saying that Moody’s may charge $68,000, apart from the previously paid $91,000, to keep the ratings of ITNL private. In response, Bhatia said: “Ok… We should keep the Moody’s rating private (and take a call after six months). Please negotiate the fees with them.”

Noting that the CEO “potentially agreed” for the payment, Grant Thornton, in its audit report, observed that given the liquidity stress in ITNL, it is unusual to note that a significant amount of $68,000 was offered to Moody’s to keep the rating of ITNL in the private domain.

Bhatia was appointed as the officiating CEO of the company in November 2018 and was re-designated to the post with effect from April 4 this year. He was also the Chief Strategy Officer of the company in September-October 2018.

In another instance, Das wrote a mail to the key management personnel including Bhatia, saying that ICRA is keen to withdraw a provisional “AAA” rating on a proposed State Bank of India loan. But as the bank was unlikely to go ahead with the loan, ICRA had suggested that ITNL should itself request for withdrawal of the rating in view of the transaction not going through which would “help avoid embarrassment of suo moto withdrawal by ICRA”, Das said in the mail.

Again, on January 8, 2018, the now-arrested Arun K. Saha, who was then joint director of IL&FS Financial Services (IFIN), wrote to Bhatia highlighting that there will be an immediate downgrade of rating by India Ratings for ITNL but not by several points, with copies marked to Das, then IL&FS Vice Chairman Hari Sankaran and then ITNL MD Karunakaran Ramchand.

The said e-mail was responded by Ramchand and ILFS MD and CEO Ramesh Bawa where they appear to suggest that there should be a delay in the downgrade of ratings to complete certain important transactions.

Sankaran further informed the group that he and Saha had met with key officials of Indian Ratings and they appear to have delayed the rating downgrade actions by three months. All four – Ramchand, Bawa, Sankaran and Saha – were arrested by the investigating agencies earlier this year.

“Thus, the review of the email indicates that even though India Ratings was planning to downgrade the rating since January 2018, they appear not to do so and delayed the rating process as suggested by the key former officials of IL&FS,” the report said.