MUMBAI/NEW DELHI - Credit rating agencies for years assigned high ratings to India’s Infrastructure Leasing & Financial Services and its group companies despite its deteriorating finances, according to a special audit.
In a 105-page report, reviewed by Reuters on Saturday, Grant Thornton said the agencies raised multiple concerns on IL&FS group’s financial stress and liquidity position between June 2012 and June 2018, but continued to assign “consistently high” ratings which were only downgraded or reversed last year.
Brickwork said it did not assign the highest ratings to IL&FS “because it follows robust, transparent and consistent rating methodology” and its actions were not influenced by any commercial pressures or rating withdrawal requests. “These instances show a glimpse into the incestuous financial services industry where quid pro quo has become the norm. The rot ... is deep and needs more cleansing,” said Shriram Subramanian, a corporate governance expert at proxy advisory firm InGovern.
Highlighting “potential favours/gifts”, Grant Thornton said various key officials at rating agencies received gifts such as smartwatches, shirts and coasters.
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