CBI probe into Deccan Chronicle on: Canara Bank

CMD says action should be taken against the media company

The Central Bureau of Investigation (CBI) has begun a probe into the debt-laden media company Deccan Chronicle Holdings Ltd (DCHL).

The investigation follows a complaint by Canara Bank of irregularities in the DCHL balance sheet when it had done a forensic audit of the Hyderabad-based company.

“There are irregularities in the books of accounts and, accordingly, action should be taken,” said Canara’s chairman and managing director, R K Dubey. “We have filed a case in the Debt Recovery Tribunal. We have also filed a case with the CBI and they have started investigation. Initial action has been initiated and every effort will be made to recover the money.”

He said the bank had written to CBI about three months earlier, after the forensic audit it had commissioned was found to be making no progress. DCHL, he said, owed Rs 360 crore to Canara; the former’s total debt liability was around Rs 4,000 crore.

The CMD was responding to a volley of questions, on his first visit to this city after taking charge of the bank.

“The purpose of the forensic audit was to know where the money had gone,” he explained further. “But that purpose was not served fully as the balance sheet did not reveal the true picture. The balance sheet did not contain all the loans lent by banks. That means there are several issues in the balance sheet itself.”

He said the forensic audit threw limited light on these things, as it was very difficult to find the end-use of the funds after these got transferred. He clarified that Canara was not a lead bank for DCHL and nor was there any consortium of lenders to the firm.  

Beside the absence of loan entries, the forensic audit also pointed to filing of wrong registration certificates, in a bid to take loans by mortgaging the same property with multiple lenders, he alleged. It was, he added, difficult to know as to what part of the security was available to whom.

“About 40-50 per cent of loans have been secured by current assets and receivables. There are multiple claims because the security charged to me is also charged to other banks,” he said, stating it was going to be a court or a judicial authority which would decide which secured lender has got what share of security.

Hopeful of recovering the money, he said the bank had taken all legal measures, including recourse under the Securitisation Act and multiple suits seeking interim relief.

On the demerger plan DCHL had referred to in its annual report, the Canara Bank chairman said it had not sent any proposals to the bank in this regard.