As the Central Bureau of Investigation (CBI) has filed a new case against earstwhile DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan for defrauding a consortium of 17 banks led by Union Bank of India for Rs 34,615 crore, it has become the biggest bank fraud case registered by the agency.
The agency booked the Dewan Housing Finance Corporation Ltd (DHFL), Kapil Wadhawan, the then CMD, Dheeraj Wadhawan, the director and six realtor companies for allegedly being part of criminal conspiracy to cheating the consortium led by the Union Bank of India to the tune of Rs 34,615 crore, the officials said. The agency has acted on a complaint from the bank on February 11, 2022, they said. Here’s the details of the issue:
What’s The Fraud?
A 17-member lender consortium had extended credit facilities to the tune of Rs 42,871 crore between 2010 and 2018. DHFL was hit by an investigation in January 2019 after media reports on allegations of siphoning of funds surfaced.
The lenders held a meeting on February 1, 2019, and appointed KPMG to conduct a “special review audit” of DHFL from April 1, 2015, to December 31, 2018. The banks also issued a look-out circular against Kapil and Dheeraj Wadhawan on October 18, 2019, to prevent them from leaving the country. Union Bank of India (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.
Who are the Wadhawans And What’s Their Involvement In The Fraud?
Kapil Wadhawan is the former CMD of Dewan Housing Finance Corporation Ltd (DHFL) and Dheeraj Wadhawan is the former director. Both were the promoters of DHFL.
The promoters of erstwhile DHFL, Kapil and Dheeraj Wadhawan, are currently in jail in connection with the cases registered by CBI and the Enforcement Directorate for the alleged fraud caused to Yes Bank in connivance with the bank’s cofounder Rana Kapoor who is also lodged at Taloja jail on the outskirts of Mumbai.
The Enforcement Directorate (ED) in a prosecution complaint (charge sheet) has said, “Rana Kapoor, DHFL promoters Kapil Wadhawan, Dheeraj Wadhawan and others were involved in criminal conspiracy with each other in illegal diversion and siphoning off of funds through suspicious transaction of Rs 5,050 crore.”
The ED said investigation has revealed that Yes Bank had bought debentures worth Rs 3,700 crore between April 2018 and June 2018 from DHFL. Therefore, the amount was transferred to DHFL. Subsequently, DHFL gave a loan of Rs 600 crore to DOIT Urban Ventures Pvt Ltd (an entity, beneficially owned by Rana Kapoor and his family).
Yes Bank had also sanctioned a loan of Rs 750 crore to one M/s Belief Realtors Private Limited (beneficially owned by Wadhawans) for development of its Bandra Reclamation Project in Mumbai. Investigation has revealed that the entire amount was siphoned off by the Wadhawans without spending a single penny for the declared purpose, the ED said.
The Wadhawan brothers are currently under judicial custody in relation with the cases filed by the Enforcement Directorate and the CBI for the fraud cases involving Yes Bank.
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