Home » ED Arrests Top Honchos of DCHL in a Rs. 9,805 crore Bank Fraud

ED Arrests Top Honchos of DCHL in a Rs. 9,805 crore Bank Fraud

by Raju Vernekar
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By Raju Vernekar
Mumbai, June 16

The Directorate of Enforcement (ED) arrested three top officials of the Deccan Chronicle Holdings Limited (DCHL) in a Rs. 9,805 crore fraud involving 16 public sector and private banks, early this week.

DCHL publishes the English newspaper“Deccan Chronicle”which is mainly circulated in South India. It has corporate office at Secunderabad in Telengana state.

Chairman of M/s DCHL T. Venkattram Reddy, Promoters and former Director P K Iyer and statutory auditor of DCHL Mani Oommen were arrested under the Prevention of Money Laundering Act (PMLA), 2002 on Tuesday, ED’s statement read. Earlier ED had attached movable/immovable properties of DCHL and its promoters/directors amounting to Rs. 386.17 crore in this case earlier.

In connivance with the statutory auditor, the accused availed 111 credit facilities from 16 public sector and private banks to the tune of Rs. 9,805 crore under the pretext of working capital / business expansion requirements. However, the loans were obtained on the basis of fabricated books of accounts and the company did not disclose its correct loan liabilities to the banks. The financial charges were understated and advertising revenues were overstated to defraud the banks for obtaining new loans.

ED began money laundering investigation based on the multiple FIRs registered by CBI Bengaluru and Telangana Police on charges of criminal conspiracy, cheating and forgery by  DCHL, its promoter, directors and others. Prosecution complaint filed by Securities & Exchanges Board of India (SEBI) against DCHL was also taken within the ambit of PMLA investigation.

DCHL utilized 73% of the loan amounts only for the cyclical repayment of existing loans. Eventually, the loans turned into non-performing assets and the company defaulted on principal loans of around Rs. 3,000 crore and caused a total loss of Rs. 8,180 crore to the banks and other financial creditors, in complete violation of the loan terms and conditions,.

The company diverted funds to its subsidiaries and associated entities including investment in Indian Premier League (IPL). Besides, Reddy purchased a private aircraft and P. K. Iyer purchased a fleet of high-end cars worth over Rs. 30 crore.

The directors withdrew the payments made to charitable trust and illegally returned back the money in cash to the DCHL. The dividend was declared and distributed by showing fictitious profits.

The promoters, who were holding up to two-thirds of the shareholding in the company, pocketed around Rs. 143 crore among themselves. Besides, Rs. 253 crore were diverted to  buy-back shares with an intent to bolster the stock prices and to project a financially rosy picture of the company, the ED statement read.

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Imphal Times is a daily English newspaper published in Imphal and is registered with Registrar of the Newspapers for India with Regd. No MANENG/2013/51092


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