The CBI has booked Dewan Housing Finance Ltd, its former CMD Kapil Wadhawan, director Dheeraj Wadhawan and others for bank fraud of Rs 34,615 crore, making it the biggest such case probed by the agency, officials said Wednesday.
Following the registration of case on June 20, a team of over 50 officials from the agency on Wednesday carried out coordinated searches on 12 premises in Mumbai belonging to FIR-listed accused which also include Sudhakar Shetty of Amaryllis Realtors and eight other builders.
The action came on a complaint from the Union Bank of India (UBI), leader of 17-member lender consortium which had extended credit facilities to the tune of Rs 42,871 crore between 2010 and 2018.
The bank has alleged that Kapil and Dheeraj Wadhawan in criminal conspiracy with others misrepresented and concealed facts, committed criminal breach of trust and abused public funds to cheat the consortium to the tune of Rs 34,614 crore by defaulting on loan repayments from May 2019 onwards.
The audit of DHFL account books showed that the company allegedly committed financial irregularities, diverted funds, fabricated books, round tripped funds to "create assets for Kapil and Dheeraj Wadhawan" using public money.
Both are in judicial custody in connection with previous fraud cases against them.
The DHFL loan accounts were declared non-performing assets at different points of time by lender banks, they said.
When DHFL was hit by investigation in January 2019 after media reports on allegations of siphoning of funds surfaced, the lender banks held a meeting on February 1, 2019 and appointed KPMG to conducted a "special review audit" of DHFL from April 1, 2015 to December 31, 2018.
The banks also issued a Look Out Cirular against Kapil and Dheeraj Wadhawan on October 18, 2019 to prevent them from leaving the country, they said.
The UBI has alleged that KPMG, in its audit, red-flagged diversion of funds in the garb of loans and advances to related and interconnected entities and individuals of DHFL and its directors.
The scrutiny of account books showed that 66 entities having commonalities with DHFL promoters were disbursed Rs 29,100 crore against which Rs 29,849 crore remained outstanding.
"Most of the transactions of such entities and individuals were in the nature of investments in land and properties," the bank alleged.
It revealed that the DHFL, in number of instances, disbursed funds within one of month, diverted funds for investment in entities of Shetty, loans were rolled over without NPA classification, repayments worth hundreds of crores was untraceable in bank statements and unjustified moratorium on principal and interest was given.
Another major outstanding in DHFL accounts was Rs 11,909 crore arising out of loans and advances worth Rs 24,595 crore given to 65 entities between April 1, 2015 and December 31, 2018.
The DHFL and its promoters also disbursed Rs 14,000 crore as Project Finance but reflected the same as retail loans in their books.
"This led to creation of inflated retail loans portfolio of 1,81,664 false and non-existent retail loans aggregating Rs 14,095 crore outstanding.
The loans referred to as "Bandra Books" were maintained in a separate database and subsequently merged with Other Large Project Loans (OLPL).
"It was revealed that OLPL category was largely carved out of the aforesaid non-existent retail loans amounting to Rs 14,000 crore, out of which Rs 11,000 crore was transferred to OLPL loans and Rs 3,018 crore was retained as a part of retail portfolio as unsecured retail loans," it alleged.
The DHFL, its directors and executives kept maintaining that they were trying to de-stress the company through various means like securitization of pool of housing loans, project loans, divestment of promoters' stake in the company, they said.
Kapil Wadhawan continued to maintain that DHFL has six months of cash liquidity and would remain cash surplus even after considering all repayment obligations, the bank alleged.
After having "falsely assured" lenders, the DHFL delayed interest payment obligations to terms loans in May 2019 which continued thereafter with account declared a non-performing assets, they said.
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