In a significant development, the Enforcement Directorate (ED) has apprehended T. Venkattram Reddy and P. K. Iyer, the promoters and former directors of Deccan Chronicle Holdings Ltd (DCHL), along with the statutory auditor, Mani Oommen, in connection with a bank fraud case. This comes as the ED intensifies its investigations into the financial irregularities involving the renowned newspaper company.
The ED’s action follows multiple FIRs filed by the CBI, Bengaluru, and Telangana Police, which accused DCHL, its promoters, directors, and others, of criminal conspiracy, cheating, and forgery. The Securities and Exchange Board of India (SEBI) has also filed a prosecution complaint against DCHL and other individuals, further broadening the scope of the investigation.
According to the ED’s investigation under the Prevention of Money Laundering Act (PMLA), T. Venkattram Reddy, the Chairman of DCHL, in collusion with other promoters, directors, and the statutory auditor, engaged in fraudulent activities to deceive banks and non-banking financial companies (NBFCs). By misrepresenting loans as working capital and business expansion requirements, DCHL managed to secure 111 credit facilities amounting to Rs 9,805 crore from 16 public and private banks.
However, it has been revealed that these loans were obtained based on manipulated books of accounts, with DCHL deliberately concealing its actual loan liabilities from the banks. The company consistently understated financial charges and inflated advertising revenues to deceive the banks and obtain additional loans.
The investigation further uncovered various instances of misappropriation and diversion of loan funds by DCHL’s promoters. The company diverted funds to repay existing loans, in violation of the terms and conditions. Shockingly, 73 percent of the loan amounts were solely utilized to cyclically repay outstanding loans, resulting in the loans becoming non-performing assets. Consequently, DCHL defaulted on principal loans amounting to approximately Rs 3,000 crore, causing a massive loss of Rs 8,180 crore to its creditors.
The ED’s actions highlight the seriousness of the financial fraud committed by DCHL and its promoters. As the investigation progresses, the authorities aim to bring all those involved in the fraudulent activities to justice.
The ED’s arrests of the promoters, former directors, and the statutory auditor of Deccan Chronicle Holdings Ltd mark a crucial step in the investigation of a bank fraud case. The alleged financial irregularities, including fraudulent loan disbursements, misappropriation of funds, and loan repayment discrepancies, have caused substantial losses to the creditors. The ED’s thorough investigations under the PMLA aim to hold the responsible individuals accountable for their actions and ensure justice prevails in this case of financial misconduct.