Century Communications: Firm diverted funds with fake invoices from suppliers owned by the promoters, says Indian Bank caution notice

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New Delhi | Published: December 19, 2015 8:24:10 AM

Even as public sector banks struggle to auction the properties of Century Communication Ltd, a company that has defaulted on loans of over Rs 2,000 crore, an investigation has found that the promoters of the company used fake vendor invoices to divert borrowings.

fundsEven as public sector banks struggle to auction the properties of Century Communication Ltd, a company that has defaulted on loans of over Rs 2,000 crore, an investigation has found that the promoters of the company used fake vendor invoices to divert borrowings. (Reuters photo)

Even as public sector banks struggle to auction the properties of Century Communication Ltd, a company that has defaulted on loans of over Rs 2,000 crore, an investigation has found that the promoters of the company used fake vendor invoices to divert borrowings.

Century Communication, which launched India’s first bhojpuri channel Mahuaa TV in 2008, is now being investigated by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) for alleged siphoning of funds raised from 14 state-owned banks. The CBI has registered six cases against the company and its promoters, PK Tewari and Anand Tewari. CBI had arrested both the promoters in 2012 and they are currently out on bail.

Ironically, despite filing a chargesheet against the promoters of the company and some officials of the public sector banks for forgery in July 2013, the CBI has not been able to take action against bank officials.

Under the current norms, a court cannot take cognizance of an offence committed by public servants, without a sanction of the appropriate authority under Section 19 of the Prevention of Corruption Act. In this case, the appropriate authority are the public sector banks. According to a CBI official, who spoke on condition of anonymity, the banks have not approved the request of CBI to proceed against erring bank officials in this case.

The Indian Express sent a detailed mail to all the banks that have an exposure to Century Communication seeking comment but none responded. Emails sent to Century Communication and PK Tewari remained unanswered.

Century Communication owes Rs 916 crore to ten banks — Indian Overseas Bank, Oriental Bank, State Bank of India, Canara Bank, Punjab National Bank, State Bank of Hyderabad, Bank of Baroda, Union Bank of India, Andhra Bank and Vijaya Bank, according to the CBI official. Pearl Vision Pvt Ltd, an associate company of Century, owes about Rs 340 crore to six banks — Indian Overseas Bank, Oriental Bank of Commerce, Bank of Baroda, Punjab National Bank, Syndicate Bank and Vijaya Bank. Mahuaa Media Pvt Ltd and Pixion Media Pvt Ltd, two other associate firms of Century Communication, also owe Rs 234 crore and Rs 695.42 crore, respectively, according to CBI.

Modus operandi

A June 2012 caution notice of Indian Bank accessed by The Indian Express, said the company used to maintain a no lien account with its lead bankers and all the sanctioned loan funds was sent to this account.

The funds pooled in the account from the members of the consortium were then diverted by the company through fake invoices from various suppliers. Some of these companies which gave fake invoices belonged to the promoters of the company, said the caution notice.

“….an investigation was carried out by the bank which confirmed that the borrower company had diverted funds for other purposes than the intended one…..” said the Indian Bank caution notice.

A caution notice is an internal communication issued by a bank to its branches alerting them about companies which have defrauded other banks. The notice also requires the branches to report if the company in question has any credit facility with the bank.

Noida-based Century Communication was formed in 1995 as a media and entertainment company, according to Bloomberg. The company offers services for film and video post production and VFX, air time sales, television content production, broadcast branding and design, and radio broadcasting.

Its associate firm Pixion Media is one of India’s most popular VFX and post-production studios for Bollywood. In 2013 alone, Pixion worked on special effects for at least two big Bollywood films — Bhaag Milkha Bhaag and Krrish 3, among others.

According to the caution notice, Century Communication released a major portion of the proceeds of its term loans in favour of two companies — Avitel Electronics and Amarjyothi Vyapar Pvt. Ltd which were allegedly the suppliers of the firm. These two companies were allegedly managed by the promoters of Century Communication.

Similarly, the promoters of Century Communication used four other firms — Via Earth Films Pvt. Ltd, Sun Broadcast Equipments, Sun Infonet P.Ltd. and Real Image, to siphon off funds according to the Indian Bank notice. These companies used to issue fake invoices to Century Communication and pocket the

loan money. The investigations have revealed that demand drafts were issued from the proceeds of term loan in favour of Avitel Electronic, Amarjothi Vyapar and Via Earth Films Pvt. Ltd.

“The proceeds were credited in the accounts of these companies. These accounts were opened by PK Tiwari and Anand Tiwari promoter/directors of Century Communications Ltd. and their close associates/family members,” said the Indian Bank notice.

According to the probe, the font style used in the text of invoices of Avitel Electronics, Sun Broadcast Equipments, Sun Infonet P.Ltd., Real Image and Amarjyoti Vyapar, was same. The investigators have alleged that Century Communication had submitted “fake invoices”.

“The investigating officials also observed that above supplier companies viz. Avitel Electronics, Sun Broadcast Equipments, Sun Infonet P.Ltd., Real Image and Amarjyoti Vyapar were not registered in those names and the companies were not in existence/not functioning at the address as given in the invoices,” said the Indian Bank notice.

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