ED arrests Deccan Chronicle’s T Venkattram Reddy, PK Iyer for bank fraud
the Implementation Directorate (ED) has arrested T Venkattram Reddy and PK Iyer, promoters and former directors of Deccan Chronicle Holdings Ltd (DCHL), and their auditor Mani Omin on charges of embezzling funds to the tune of Rs 9,805 crore seeking under the pretext of business expansion.
The funds were diverted to invest in the now defunct Deccan Chargers franchise of the Indian Premier League (IPL), to purchase a private jet by Reddy and a fleet of high-end cars worth more than Rs 30 crore by Iyer, the ED alleged.
Investigations revealed that Reddy, Chairman of the Board of Directors of the DCHL, along with other promoters/managers, and in collusion with the statutory auditor, defrauded banks and non-bank financial companies. 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 taken out by DCHL on the basis of fabricated account books and the company did not disclose the correct loan obligations to the banks,” the ED claimed.
The investigating agency said DCHL, its promoters and managers underestimated financial charges and overestimated advertising revenue to persistently defraud banks for new loans.
“In complete violation of the terms and conditions of the loan, DCHL used 73 percent of the loan amounts solely for periodic repayments of existing loans. In the end, the loans turned into non-performing assets and DCHL defaulted on principal loans of around Rs. 3,000 crore and caused a total loss of Rs. 8,180 crore to banks and other financial creditors, alleges ED.
Bank money was also paid into charitable funds, illegally withdrawn and returned to the promoters of the Deccan Chronicle in cash. The company is accused of advertising and distributing dividends by showing fictitious profits and through this illegal route the promoters, who are two-thirds of the shareholders, have acquired about Rs 143 crore between them.
They are also alleged to have rinsed “₹253 crore to buy back shares with the intent of boosting share prices and projecting a rosy picture financially”. Earlier, ED attached movable and immovable properties of DCHL, its promoters and directors worth $386.17 crore in this case.
The case of Shakti Bog Foods
In another case, the emergency management has temporarily stopped 59 immovable and movable properties including 53 plots of land, shops, industrial lands and farmland located in Delhi, Noida, Sonipat (Haryana), Jalandhar (Punjab) and Hyderabad. Cash in bank accounts of Rs 28.67 crore owned by Sunil Dhobar, Former CA and Chartered Auditor of Shakti Bhog Foods Ltd (SBFL), his family members/companies, Indeep Singh Arora and his family members and residence entry operator Devinder Kumar. Attached under the Prevention of Money Laundering Act (PMLA), 2002, ed. He said
ED has initiated investigation on the basis of FIR registered by CBI against Shakti Bhog Foods Ltd and others, on charges of criminal conspiracy, fraud and criminal misconduct resulting in bank fraud of Rs 3269.42 crore.