The Enforcement Directorate (ED) announced on Wednesday that they have arrested Deccan Chronicle Holdings Ltd’s (DCHL) promoters and ex-directors T. Venkattram Reddy, and P. K. Iyer, and statutory auditor Mani Oommen in a bank fraud case.
The ED has initiated a money laundering investigation based on multiple FIRs registered by the CBI, Bengaluru and Telangana Police for criminal conspiracy, cheating, and forgery by the DCHL, its promoters, directors, and others. A prosecution complaint filed by the Securities and Exchange Board of India against the DCHL and others was also included in the scope of the PMLA investigation.
The PMLA investigation revealed that DCHL Chairman T. Venkattram Reddy, along with the other promoters, directors, and in collusion with the statutory auditor, defrauded banks and NBFCs. The DCHL has availed 111 credit facilities from 16 public sector and private banks, amounting to Rs 9,805 crore, under the pretext of working capital and business expansion requirements.
“However, these loans were obtained by the DCHL based on fabricated books of accounts, and the company failed to disclose its true loan liabilities to the banks. DCHL and its promoters/directors understated financial charges and overstated advertising revenues consistently to deceive the banks and secure new loans,” said the ED.
It also revealed that loan funds were diverted and siphoned off by the company’s promoters in various ways and for different purposes.
“They diverted loans for the repayment of existing loans, violating the loan terms and conditions. DCHL utilised 73 per cent of the loan amounts solely for the cyclical repayment of existing loans. Consequently, the loans turned into non-performing assets, and DCHL defaulted on principal loans of approximately Rs 3,000 crore, causing a total loss of Rs 8,180 crore to the banks and other financial creditors,” the ED said.
The ED also disclosed that Venkattram Reddy purchased a private aircraft, and Iyer used diverted funds to purchase a fleet of high-end cars worth over Rs 30 crore.
Additionally, payments were made to charitable trusts, which were later withdrawn and illegally returned to the promoters of the DCHL in cash.
“The promoters, holding up to two-thirds of the company’s shareholding, pocketed an amount of around Rs 143 crore among themselves by declaring and distributing dividends based on fictitious profits. Furthermore, Rs 253 crore was diverted for the buy-back of shares, intending to artificially inflate stock prices and present a financially favorable image,” added the ED.
Previously, the ED had attached movable and immovable properties of the DCHL and its directors, totalling Rs. 386.17 crore in this case.
The investigation into the matter is still ongoing.
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