Bank loan fraud: ED attaches over Rs 122-crore assets of DCHL, ex promoters

By: |
October 16, 2020 8:50 PM

A total of 14 properties located in New Delhi, Hyderabad, Gurgaon, Chennai, Bangalore and a few other places that belong to DCHL, its former promoters T Venkatram Reddy and T Vinayakravi Reddy and that of a benami company "floated by them" have been attached.

So far, it said, assets totaling to Rs 264.56 crore have been identified and provisionally attached by the ED under provisions of the Prevention of Money Laundering Act (PMLA) in this case.

 

Assets worth over Rs 122 crore belonging to Deccan Chronicle Holdings Limited (DCHL) and its former promoters have been attached under the anti-money laundering law in connection with an alleged bank loan fraud case, the Enforcement Directorate (ED) said on Friday.

A total of 14 properties located in New Delhi, Hyderabad, Gurgaon, Chennai, Bangalore and a few other places that belong to DCHL, its former promoters T Venkatram Reddy and T Vinayakravi Reddy and that of a benami company “floated by them” have been attached, the central probe agency said in a statement.

The company at present is under corporate insolvency resolution process but the attached properties are not covered under the process being adjudicated by the national company law tribunal (NCLT), the agency claimed.
A resolution plan for only Rs 400 crore has been approved by the NCLT. The total loan fraud committed by DCHL and its promoters is estimated to be at Rs 8,180 crore, it claimed.

The agency claimed its probe found that “the three promoters of DCHL namely P K Iyer, T Venkatram Reddy and T Vinayakravi Reddy hatched a well planned conspiracy and manipulated the balance sheets of the company inflating the profits-advertisement revenue and grossly understated the financial liabilities of the company to paint a rosy picture for years to cheat the banks and its shareholders”.

“Despite the initiation of the insolvency resolution process, the accused promoters and their close family members continue to yield indirect control over the print media and are working in senior capacities drawing large monthly salaries,” the ED claimed. It said balance sheets of the company were fudged and loans taken from one bank were hidden from other financial institutions.

“Over the years, DCHL availed credit facilities to the tune of more than Rs 15,000 crore. Money trail investigation revealed that most of the loans were cyclically rotated into group companies and were diverted to pay back older loans.”

“Loans taken for working capital requirements and for business needs of DCHL were diverted to extravagant projects and the diverted funds which were so invested into new projects without the consent of the banks and were ultimately shown as losses,” it claimed.

Substantial amounts out of the loans were diverted into subsidiaries which have not done any legitimate business and also into the proprietary concerns of the two ex-promoters without any proper accounting, the ED claimed.

“The accused promoters received hefty kickbacks from the investment made by DCHL into Odyssey (a company) at highly inflated values. The promoters ran the public listed company DCHL like their proprietary fiefdom throwing all norms of corporate governance to wind,” it claimed. It claimed probe found there were many “suspicious” donations to various trusts.

“The promoters were also found to be re-purchasing the mortgaged assets at discounted rates through private treaties by using concealed proceeds of crime through front company. The net amount of loss caused to the banks/NBFCs/financial institutions is estimated at Rs 8,180 crore including the unpaid principal loan amount of approximately of Rs 3,000 crore,” it claimed.

So far, it said, assets totaling to Rs 264.56 crore have been identified and provisionally attached by the ED under provisions of the Prevention of Money Laundering Act (PMLA) in this case. The ED filed a PMLA case against the firm and its promoters in 2015 after studying a CBI FIR registered to investigate the alleged bank loan default.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1PM Modi to inaugurate conference on vigilance and anti-corruption
2Devendra Fadnavis will now realise COVID-19 situation is serious: Shiv Sena MP Sanjay Raut
3BJP launches training programme to prepare booth-level workers for 2022 Delhi civic body polls