DHFL case: Bogus transactions of Rs 1,864 crore unearthed, says report

The transaction auditor appointed to mortgage lender Dewan Housing Finance (DHFL) has discovered that certain agreements entered into by the lender at the time of selling its stake in Pramerica Life Insurance Company to DHFL Investments, as well as certain inter-corporate deposits (ICDs), were undervalued and of fraudulent nature. ‘

According to the transaction auditor’s report, preliminary estimation places the monetary impact of the concerned transactions at Rs 1,864.84 crore — comprising a principal amount of Rs 1,739.57 crore and accrued interest of Rs 125.27 crore — as the outstanding in firm’s books as of November 30, 2019. Further, it said the notional interest loss was to the tune of Rs 58.34 crore owing to the lower interest rate charged while giving ICDs, and Rs 227.66 crores transferred in the form of ICDs and used to repay a promoter-linked entity.

The administrator has filed an application in the National Company Law Tribunal (NCLT) against 10 respondents, including Kapil Wadhawan, Dheeraj Wadhawan, Aruna Wadh­awan, Wadhawan Global Capital, ICD entities, and certain other entities reported by the transaction auditor.

According to the report by the transaction auditor, the concerned transactions occurred between FY17 and FY19. DHFL was the first financial services company to be admitted under the IBC. The mortgage lender reported pre-tax profit of Rs 92.81 crore in the quarter ending June 2020 (Q1FY21), compared to a loss of Rs 198.85 crore during the same period in the last financial year.