INDIA: The Directorate of Enforcement (ED) arrested three top officials of 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 a corporate office in 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, the ED’s statement read.
Earlier, the ED had attached movable and immovable properties of DCHL and its promoters and directors amounting to Rs. 386.17 crore in this case.
In connivance with the statutory auditor, the accused availed of 111 credit facilities from 16 public sector and private banks to the tune of Rs. 9,805 crore under the pretext of working capital and 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 into obtaining new loans.
ED began a 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.
A prosecution complaint filed by the Securities and Exchange Board of India (SEBI) against DCHL was also taken within the ambit of the PMLA investigation.
DCHL utilised 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, causing 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 investments in the 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 trusts and illegally returned the money in cash to the DCHL. The dividend was declared and distributed by showing fictitious profits.
The promoters, who held 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 stock prices and project a financially rosy picture of the company, the ED statement read.
