ED Arrests 2 Promoters, Auditor of DCHL in Bank Fraud-linked Money Laundering Case

The Enforcement Directorate arrested two promoters and an auditor of Deccan Chronicle Holdings Limited (DCHL) on Wednesday as part of a money laundering investigation linked to a bank fraud case. Those arrested under PMLA provisions include T. Venkatram Reddy and BK Iyer, promoters and former directors of DCHL, and Mani Omin, the company’s statutory auditor.

In a statement, the federal agency said it has launched a money laundering investigation on the basis of multiple FIR reports recorded by the Central Bureau of Investigation (CBI) and Telangana Police for criminal conspiracy, fraud and forgery by DCHL, its promoters, directors and others. , apart from the prosecution complaint filed by the Securities and Exchange Board of India (SEBI) against the company and others. The PMLA investigation found that Reddy, the former head of the DCHL, along with other promoters and managers, “in collusion” with the statutory auditor, defrauded banks and non-bank financial firms.

“DCHL has availed 111 credit facilities from 16 public banks and private banks to the tune of Rs 9,805 crore on the pretext of working capital requirements/business expansion.” However, these loans were obtained by DCHL on the basis of fabricated books of accounts and the company did not disclose the correct loan commitments to the banks. The agency alleged that DCHL and its promoters/managers underestimated financial charges and overestimated advertising revenue to continually defraud banks to obtain new loans.

It said the loan money was “diverted and withdrawn” by the company’s promoters in several ways and for different purposes. “In complete violation of the terms and conditions of the loan, DCHL used 73 per cent of the loan amount only for periodic repayment of existing loans. Eventually, the loans turned into non-performing assets and DCHL defaulted on principal loans of about Rs 3,000 crores and incurred a total loss of Rs 8,180 crores. rupees to banks and other financial creditors.”

It added that it had found transfer of funds to subsidiaries of entities associated with the company, including investment in the Indian Premier League (IPL). She mentioned Reddy’s purchase of a private jet and Iyer’s purchase of a fleet of high-end cars worth more than Rs 30 crore.

Payments to charitable funds, which were illegally withdrawn and returned to DCHL promoters “in cash,” were exposed, the ED said. A particular case of ‘declaring and distributing’ dividends by showing bogus dividends was found, and the promoters, who held up to two-thirds shareholding in the company, got approximately Rs 143 crore between them, allegedly.

An example was also found of an alleged transfer of Rs 253 crore to buy back shares with the intent of boosting share prices and projecting a rosy picture financially. The agency filed a PMLA case against the company and its promoters in 2015.

(This story was not edited by the News18 staff and was published from a syndicated news agency feed – PTI)