Agencies / New Delhi
Promoters of Dewan Housing Finance Corporation (DHFL) siphon off Rs 33,000 crores in public money through secured and unsecured loans and advances to shell companies, illegal round tripping, tax avoidance and insider trading claims Cobrapost in its latest revealation.
Cobrapost which know for its sting today held a press conference here, making allegations against promoters of Dewan Housing Finance Corporation (DHFL).
The siphoning off was primarily carried out through grants of loans and advances to shell companies and by using other means, Cobrapost claimed.
Money was allegedly routed through the dubious companies and parked outside India, to acquire assets.
“By closely scrutinizing public records available with public authorities and information available in public domain, Cobrapost has unearthed a financial scam where the primary promoters of Dewan Housing Finance Corporation Limited (DHFL) and their associate companies have committed a systemic fraud in broad daylight to siphon off public money amounting to more than Rs. 31,000 crore. The scam has been pulled off mainly by sanctioning and disbursing astronomical amounts in secured and unsecured loans to dubious shell/pass-through companies, related to DHFL’s own primary stakeholders Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan through their proxies and associates, which have in turn passed the money on to companies controlled by the Wadhawans. The money has been used to buy shares/equity and other private assets in India and abroad, including in countries like UK, Dubai, Sri Lanka and Mauritius.
The anatomy of the scam, as illustrated herein, has repercussions for the larger financial system in India. As an industry practice, loans are advanced to companies and are secured by not only the properties of the borrower company but also by personal guarantees of promoters of companies. By lending to shell/pass-through companies without due diligence, DHFL has ensured that the recovery of such dubious loans is impossible since the companies or their directors themselves do not own any assets. This way the properties/private wealth acquired by the Wadhawans and their associates by using the funds from these dubious loans are completely ring-fenced from any recovery process that may be initiated by authorities under the SARFAESI Act or Insolvency and Bankruptcy Code of India. Thus, the only losers in the entire process would be small public depositors, the public sector banks, such as State Bank of India and Bank of Baroda, with an exposure of over Rs. 11,000 crore and Rs. 4,000 crore, respectively, foreign banks and public shareholders/investors of DHFL. Debt recovery is an important metric on which ease of doing business is judged. Such scams, if not identified, resolved and persons responsible punished, will only affect India’s prestige on the world stage. In case, the Government of India takes over DHFL, as it took over IL&FS, without a thorough investigation into its affairs by investigating agencies such as CBI, SFIO and Enforcement Directorate, then the Wadhawans who are principal beneficiaries of the scam will go scot free” says Press release by Cobrapost.