Misappropriation of funds worth Rs 25,000 crore in DHFL case, says ED

Officials say they've come across a dozen new transactions involving DHFL, Wadhawan brothers

The Enforcement Directorate’s (ED) preliminary enquiry has pointed at misappropriation of funds to the tune of Rs 25,000 crore by the promoters of Dewan Housing Finance (DHFL) in the alleged financial fraud. 

Earlier, ED had suspected DHFL of diverting Rs 12,773 crore of loans to 79 “shadowy’’ companies allegedly associated with its promoters Kapil Wadhawan and Dheeraj Wadhawan between 2010 and 2015.  Officials said they had come across at least a dozen new transactions involving DHFL and the Wadhawan brothers, implying that the fraud was much larger than estimated earlier.  The transactions included price rigging of DHFL shares by the promoters through five front entities; certain loans and investments with private lender YES Bank; suspicious loans given to about 30 firms without proper due diligence; a close link with a Mumbai-based businessman Sudhakar Shetty and some real estate deals.  On financial ties with YES Bank, the ED enquiry findings have highlighted the private lender debt exposure to the tune of Rs 3,700 crore in the DHFL debenture between April 2018 and June 2018 and also in July 2018. In addition, YES bank sanctioned a loan of Rs 750 crore to Dheeraj Wadhwan’s RKW developer for a project near Mumbai’s Bandra Reclamation. 

YES Bank declined to comment on the specific queries. The bank spokesperson, however, said under the bank’s privacy policy, it would not be possible to disclose the client details and the respective transactions.  Replying to a message, Rana Kapoor, founder and former managing director of YES Bank, said the allegations were false and malicious.

The ED, which is probing the DHFL promoters’ role in financing funds to gangster Iqbal Memon (alias Iqbal Mirchi), is now ascertaining the scheme of things behind each of the financial transactions it had come across in the matter, said an ED official privy to the preliminary enquiry findings. 

On the alleged price rigging, ED officials said an amount of around Rs 4,000 crore was diverted by rigging the share price of DHFL by the promoters through some front companies based in Mumbai and Ahmedabad — Rite Developers, Rite Buildtech, Man infrastructure Infinium India, and Basant Marketing. DHFL has extended loans of Rs 5,000 crore to 30 companies without proper due diligence.

More money trails under ED lens

• DHFL sanctioned Rs 5,000 crore to 30 firms without proper due diligence 
• Rs 4,000 crore allegedly diverted by DHFL promoters by rigging share price 
• Rs 750 crore sanctioned to RKW Developers for a real estate project in Bandra
• DHFL defaulted on a loan of Rs 3,700 crore from YES Bank 
• Rs 250 crore allegedly diverted to 8 shell companies controlled by the Wadhawans 
• Another Rs 1,317 crore siphoned off to Creatoz Builders, another shell firm of the Wadhawans

“We are in the process of examining the incriminating documents and records…  The quantum of scam could easily touch Rs 25,000 crore,’’ said the official.  The ED is also looking at the agreement between Shetty and Wadhawans, who were jointly developing a real estate project for which DHFL sanctioned loan of about Rs 2,000 crore. 

The ED is probing another Rs 250 crore allegedly diverted to eight firms controlled by Wadhawans.  In exchange, fake accounts were opened in the name of several individuals. An amount of Rs 1,317 crore was diverted to Creatoz Builders,  a shell firm of Wadhawan.  ED on Monday conducted survey operations in relation to investments of UP Power Corporation Employees Provident Fund allegedly parked with DHFL. The survey was carried in Delhi, Noida, and Lucknow. The federal agency said DHFL paid a part of the Rs 4,122-crore fund under investigation. While the EOW of the UP Police is probing the alleged criminal conspiracy and unauthorised investment of the PF corpus in DHFL, the ED is investigating whether the money was laundered  and how the network was used to funnel it.