LAHORE: In India’s biggest bank fraud, the Central Bureau of Investigation (CBI) has registered a fresh case against the Dewan Housing Finance Corporation Limited (DHFL), its erstwhile promoters Kapil Wadhawan and Dheeraj Wadhawan, who are already in judicial custody, for defrauding a consortium of 17 banks, led by Union Bank of India (UBI), to the tune of Indian Rs34,615 crores (around Pakistani Rs930 billion).
Before this case, the biggest-ever case of bank fraud in India involved the ABG Shipyard in which a private firm has been accused of diverting funds to the tune of 22,842 crore India rupees (INR) borrowed from banks.
The action came on the complaint from UBI, which had extended credit facilities to the tune of INR42,871 crores between 2010 and 2018.
The bank has alleged that Kapil and Dheeraj Wadhawan in a criminal conspiracy with others misrepresented and concealed facts, committed criminal breach of trust and abused public funds to cheat the consortium to the tune of INR34,614 crores by defaulting on loan repayments from May 2019 onward.
Following the registration of a case, a team of over 50 officials from the agency carried out coordinated searches on 12 premises in Mumbai belonging to FIR-listed accused, which also include Sudhakar Shetty of Amaryllis Realtors and eight other builders.
The audit of DHFL account books showed that the company had allegedly committed financial irregularities, diverted funds, fabricated books, round tripped funds to “create assets for Kapil and Dheeraj Wadhawan” using public money. The DHFL loan accounts were declared non-performing assets at different points of time by lender banks.
When DHFL was hit by an investigation in January 2019 after media reports on allegations of siphoning of funds surfaced, the lender banks had held a meeting on February 1, 2019, and appointed KPMG to conduct a “special review audit” of DHFL from April 1, 2015, to December 31, 2018.
The banks had also issued a lookout circular against Kapil and Dheeraj Wadhawan on Oct 18, 2019, to prevent them from leaving the country. The UBI has alleged that KPMG, in its audit, red-flagged diversion of funds in the garb of loans and advances to related and interconnected entities, and individuals of DHFL and its directors.
The scrutiny of account books showed that 66 entities having commonalities with DHFL promoters were disbursed INR29,100 crores against which INR19,849 crores remained outstanding. Most of the transactions of such entities and individuals were in the nature of investments in land and properties. Hundreds of crores were untraceable in bank statements.
The DHFL, its directors and executives kept maintaining that they were trying to de-stress the company through various means like securitisation of pool of housing loans, project loans, divestment of promoters stake in the company. After having falsely assured lenders, DHFL had delayed interest payment obligations to terms loans in May 2019 which continued thereafter.
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