The Central Bureau of Investigation (CBI) has booked Kapil and Dheeraj Wadhawan, former promoters of Dewan Housing Finance Ltd (DHFL), for allegedly defrauding 17 banks for Rs34,615 crore. The agency is also conducting searches at about 15 locations in Mumbai related to the DHFL case.
This is the biggest bank fraud case registered by CBI. Its earlier bank fraud case was worth about Rs23,000 crore against ABG Shipyard Ltd.
The banks which are defrauded by the DHFL promoters include: State Bank of India (SBI) with an outstanding of Rs9,898.76 crore as of 31 July 2020, Bank of India Rs4,044.34 crore, Canara Bank Rs4,022 crore, Union Bank of India (including dues of erstwhile Andhra Bank and Corporation Bank) Rs3,812.41 crore, Punjab National Bank (including Oriental Bank of Commerce and United Bank of India) Rs3,802.09 crore, Bank of Baroda Rs2,036.45 crore, Indian Bank (including Allahabad Bank) Rs1,499.38 crore, Central Bank of India Rs1,034.07 crore, IDBI Bank Rs961.58 crore, Punjab & Sind Bank Rs815.44 crore, Indian Overseas Bank Rs686.72 crore, Bank of Maharashtra Rs633.06 crore, UCO Bank Rs557.49 crore, HDFC Bank Rs349.70 crore, Federal Bank Rs202.06 crore, Karnataka Bank Rs185.95 crore and South Indian Bank Rs71.86 crore.
The Wadhawans and others induced the consortium banks to sanction huge loans aggregating to Rs42,871.42 crore and siphoned off and misappropriated a significant portion of the said funds by falsifying the books of DHFL and dishonestly defaulted on repayment of the legitimate dues of the said consortium banks. They caused a wrongful loss of Rs36,615.00 crore to the consortium lenders.
After conducting an inquiry, the CBI had lodged the case under section 120-B of the Indian Penal Code (IPC) and section 13(2) of the Prevention of Corruption Act.
The first information report (FIR) was lodged against DHFL, its former CMD Kapil Wadhawan, MD Dheeraj Wadhawan, present director Sudhakar Shetty, Amaryllis Realtors LLP (ARLLP), Gulmarg Realtors LLP (GRLLP), Skylark Buildcon Pvt Ltd, Darshan Developers Pvt Ltd, Sigtia Constructions Pvt Ltd, Creator Builders Pvt Ltd, Township Developers Pvt Ltd, Shishir Reality Pvt Ltd, Sunblink Real Estate Pvt Ltd and other unknown persons including public servants.
Both Kapil and Dheeraj Wadhawan are currently in jail in connection with the cases registered by CBI and the enforcement directorate (ED) for the alleged fraud in Yes Bank in connivance with the Bank's co-founder Rana Kapoor.
The Wadhawans were jailed under the Prevention of Money Laundering Act (PMLA), for running a criminal operation of creating thousands of fake accounts and fake loans (the infamous Bandra Books
) and causing a loss of Rs40,000 crore.
Last September, Piramal Capital and Housing Finance Ltd (PCHF) had completed the acquisition of DHFL for Rs34,250 crore, including a cash component and non-convertible debentures.
In September 2020, market regulator Securities and Exchange Board of India (SEBI) had barred promoters and directors of DHFL, including eight members of the Wadhawan family and four of their companies, for issuing fraudulent mis-statements in the financial statements of the company since 2006.
In the order, G Mahalingam, whole-time member (WTM) of SEBI, also mentions how DHFL created a virtual branch at Bandra and maintained parallel accounts books. The 'Bandra Books' show Rs11,755.79 crore disbursed to 260,000 borrowers for home loans; however, the entire money was given to just 91 entities with approval by Kapil Wadhawan, the chairman and managing director (CMD) of DHFL.
Mr Malalingam stated, "I note from the initial report that the Company had created a 'logical partition' in the enterprise resource planning (ERP) software used for bookkeeping and loan management purposes. This 'logical partition' stored data pertaining to only one branch - Bandra, which was a virtual branch. The report notes that this appears to be a parallel set of books of accounts maintained by the Company and all the loan accounts present in this module appear to be non-genuine. These accounts have been collectively called as 'Bandra Books' in the initial report. It is also stated in the report that approvals and fund disbursal in respect of "Bandra Book" accounts were provided by the chairman and managing director of the DHFL -Kapil Wadhawan."
"I note that the report states that out of the Rs23,815 crore shown as disbursed to Bandra Book entities in the accounts of the Company, only Rs11,755.79 crore was actually disbursed. This amount (Rs11,755.79 crore), the report notes, was disbursed to 91 entities but was shown in the books of the company as comprising of 2,60,315 home loan accounts. The closing balance outstanding in the books of the company towards such accounts as of 30 June 2019 was Rs14,046 crore," the SEBI order says. (Read: DFHL's Forensic Audit Exposing Massive Fraud and Cooking of Books Leads to SEBI Order Banning DHFL Promoters
In March 2020, a case of loan fraud of Rs3,600 crore was lodged by the CBI against Rana Kapoor, the then promoter director and chief executive officer (CEO) of Yes Bank, for entering into a criminal conspiracy with Kapil Wadhawan, promoter director of DHFL and others.
They extended financial assistance to DHFL by Yes Bank in lieu of substantial undue benefit to himself and his family members through their companies.
Between April and June 2018, Yes Bank invested Rs3,700 crore in the short-term debentures of DHFL. Simultaneously, Mr Wadhawan paid a kickback of Rs600 crore to Mr Kapoor and his family members in the garb of builder loan of Rs600 crore given by DHFL to DOIT Urban Ventures (lndia) Pvt Ltd, a wholly-owned subsidiary of RAB Enterprises (lndia) Pvt Ltd, in which Bindu Kapoor, wife of Mr Kapoor, is a director and 100% shareholder.
Mr Kapoor's daughters, Roshini Kapoor, Radha Kapoor Khanna and Raakhe Kapoor Tandon, were 100% shareholders of DOIT Urban Ventures through Morgan Credits Pvt Ltd.
It was learnt that DHFL sanctioned a loan of Rs600 crore to DOIT Urban Ventures on the basis of a mortgage of a sub-standard property having a very meagre value and by considering its future conversion from agricultural land to residential land.
Also, DHFL had not redeemed the Rs3,700 crore invested by Yes Bank in its debentures. In addition to the above-mentioned, Yes Bank also sanctioned a loan of Rs750 crore to RKW Developers Pvt Ltd, which is a DHFL group company, for their Bandra Reclamation project.
The whole amount was siphoned off by Mr Wadhawan since RKW Developers transferred the entire amount to DHFL without making an investment in Bandra Reclamation project for which the loan was sanctioned.