The Enforcement Directorate (ED) arrested T Venkattram Reddy and PK Iyer, promoters and former directors of Deccan Chronicle Holdings Ltd (DCHL), and their auditor Mani Oommen on charges of diverting funds to the tune of ₹9,805 crore wanted under the pretext of business expansion.
The funds were diverted to invest in the now-defunct Indian Premier League (IPL) franchise Deccan Chargers, for Reddy’s purchase of a private jet and a fleet of high-end cars worth over Rs 30 crore. by Iyer, the ED alleged.
The investigation revealed that DCHL President Reddy, along with the other promoters/directors, and in collusion with the statutory auditor, defrauded banks and NBFCs. “DCHL made use of 111 credit lines from 16 private and public sector banks to the tune of ₹9,805 crore under the pretense of business expansion/working capital requirements. However, these loans were taken by DCHL on the basis of fabricated account books and the company failed to disclose its correct loan liabilities to the banks,” the ED alleged.
DCHL and its promoters and directors understated finance charges and overstated advertising revenue to constantly defraud banks for new loans, the investigative agency said.
“In complete violation of the terms and conditions of the loan, DCHL used 73 percent of the loan amounts only for the cyclical payment of existing loans. Eventually, the loans became non-performing assets and DCHL defaulted on principal loans of around ₹3000 crore and caused a total loss of ₹8180 crore to banks and other financial creditors, the ED alleged.
Money from the bank was also paid into charitable trusts, withdrawn and illegally returned to the promoters of the Deccan Chronicle in cash. The company is accused of declaring and distributing dividends by showing fictitious profits, and through that illegal route, the promoters, two-thirds of the shareholders, pocketed around Rs 143 crore between them.
They also allegedly laundered “₹253 crore for share buybacks with the intention of boosting share prices and projecting a financially optimistic image.” Previously, the ED had attached movable and immovable property of DCHL and its promoters and directors in the amount of ₹386.17 crore in this case.
Shakti Bhog Foods Case
In another case, ED has provisionally seized 59 movable and immovable properties including 53 plots, commercial shops, industrial plots, agricultural land located in Delhi, Noida, Sonepat (Haryana), Jalandhar (Punjab), Hyderabad. Cash in bank accounts of ₹28.67 crore belonging to Sunil Dhupar, former CA and Statutory Auditor of Shakti Bhog Foods Ltd (SBFL), and his relatives/companies, Indeep Singh Arora and his relatives and the accommodation gate operator Devender Kumar have also been enacted under the Prevention of Money Laundering Act (PMLA), 2002, the ED. saying
The ED launched an investigation on the basis of an FIR registered by the CBI against Shakti Bhog Foods Ltd and others, for criminal conspiracy, deceit and criminal conduct resulting in a bank fraud of ₹3269.42 crore.