New Delhi: Care Ratings on Wednesday decided to send its CEO and managing director Rajesh Mokashi on forced leave until it finished examining an “anonymous complaint” received by the Securities and Exchange Board of India (SEBI).
In a late-night statement released on Wednesday, the Indian credit rating agency noted that it had decided to send Mokashi on leave with immediate effect pending the results of its inquiry.
The company’s board has appointed T.N. Arun Kumar, currently the executive director (Ratings) as the interim chief executive officer.
“He [Kumar] will not be a part of the rating operation to ensure independence of ratings,” the company said in its statement.
The move comes two weeks after the credit rating agency ICRA Ltd, the domestic and local affiliate of Moody’s Investors Service, also sent its MD and CEO Naresh Takkar on forced leave pending a probe into “anonymous” allegations raised against the executive.
Also read: In Indian Banking, Awards Are Effectively Being Given out for Bad Behaviour
“Pending the completion of the examination of the concerns raised in the anonymous representation that was forwarded to the company by Sebi, the board decided to place Naresh Takkar on leave, effective immediately,” ICRA had said in its regulatory filing.
While Care Ratings did not mention the nature of the anonymous complaint or what it pertained to, market sources indicated that it could be related to the Infrastructure Leasing and Financial Services Ltd (IL&FS) controversy.
In December 2018, multiple media reports highlighted how SEBI had found that three rating agencies had not acted appropriately during the IL&FS crisis and that the capital markets regulator had begun adjudicating proceedings against them.
Three agencies – India Ratings & Research, ICRA and Care – had given IL&FS the highest rating of AAA, even when its subsidiary, IL&FS Transport Networks, had defaulted in June 2018.
In May 2019, The Economic Times, quoting anonymous Serious Fraud Investigation Office officials, reported how a junior analyst at a prominent credit rating agency had raised red flags with his seniors about the situation at IL&FS, but these concerns were deliberately overlooked.
In its public remarks, ICRA has broadly admitted that its decision to send Takkar on temporary leave was over an anonymous complaint alleging wrongdoing in the rating given to IL&FS.