Hundreds of fictitious loan accounts, deposits routed through an imaginary entity in Bandra and a demand for recoveries totaling Rs 14, 046 crore – these are among the key findings in the final forensic report submitted by auditor Grant Thornton in the Dewan Housing Finance Corporation Limited (DHFL) scam.
Submitted to the RBI-appointed administrator on August 27, the report comes when DHFL’s proprietors Kapil Wadhawan and his brother Dheeraj Wadhawan are out on bail after being arrested by investigating agencies in January this year.
The 98-page report follows the preliminary report submitted by Grant Thornton to RBI-appointed administrator R Subramaniakumar in February and takes forward the modus operandi of “round-tripping” of funds via fake loans.
Referring to the case as Bandra Books, the report highlights how names of fake housing loan “borrowers” were collected — details were “randomly picked from a database that appears to be created from the details pertaining to the closed loan accounts”.
In all, 2,60,315 “fake and fictitious” home loan accounts were created in the non-existent Bandra Branch between 2007-2019 and Rs 11,755.79 crore was deposited to Bandra Book entities.
As many as 91 entities are the focus of the auditor’s final forensic report, wherein it was found that no security or collateral was obtained before grant of these loans.
The financials of 50 of them — which received 70% of the total Bandra Book disbursements — have been examined to expose the nexus between the promoters of DHFL and these borrowers.
The conclusion: “It was observed that 34 entities have invested a portion of the amount received from the Corporate Debtor (the Wadhawans) in companies, which are related parties or directly or indirectly linked to the promoters…”
The amount of fake loans disbursed to what the auditor has described as “potentially directly/indirectly” linked to the promoters is Rs 1,554.51 crore.
In several cases, the report said, funds disbursed were diverted to entities having links with the promoters.
Many borrowers used common addresses and a lower rate of interest was charged from the Bandra Books entities, all of which contributed to the insolvency crisis in DHFL.
The linkages with the Bandra Book entities are clear in several cases. For instance, the Wadhawan brothers or their relatives were found to be Directors or promoters of several of these companies.
In his own report, the RBI-appointed Administrator has noted that funds disbursed by the Corporate Debtor (Wadhawans) to Bandra Book Entities were “diverted to entities having connection with Promoters/Directors.”
And that Bandra Book entities were used as a “conduit for carrying out these fraudulent activities…these individuals are henchmen of the promoters/Directors and have acted as accessory for commission of fraud in relation to Bandra Book disbursements….’’
Along with the Wadhawan brothers, the owners of the Bandra Book entities have also been made respondents in ongoing proceedings in the National Company Law Tribunal with recoveries totaling Rs 14,046 crores to be initiated against them all.
Last week, The Indian Express had reported that a Dubai-based real estate development firm owned by the Wadhawans had gifted four properties to the late gangster Iqbal Mirchi’s son Asif Iqbal Memon in 2015, an Enforcement Directorate (ED) investigation found.
DHFL, which owes Rs 83,873 crore to banks, mutual funds and investors, became the first non-banking finance company (NBFC) to be referred to the bankruptcy court for resolution by RBI in November 2019.
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