The Enforcement Directorate (ED) has arrested T Venkattram Reddy and PK Iyer, promoters and ex-directors of Deccan Chronicle Holdings Ltd (DCHL), and their auditor Mani Oommen on charges of siphoning off funds to the tune of ₹9,805 crore sought under the pretext of business expansion.

Funds were diverted to invest in the now defunct Deccan Chargers franchise of the Indian Premier League (IPL), for purchase of a private aircraft by Reddy and a fleet of high-end cars worth more than ₹30 crore by Iyer, the ED alleged.

Investigation revealed that Reddy, Chairman of DCHL, along with the other promoters/directors, and in connivance with the statutory auditor, defrauded the banks and NBFCs. “DCHL availed 111 credit facilities from 16 public sector and private banks to the tune of ₹9,805 crore on the pretext of working capital/business expansion requirements. However, these loans were taken by DCHL on the basis of fabricated books of accounts and the company did not disclose its correct loan liabilities to the banks,” the ED alleged.

DCHL and its promoters and directors understated the financial charges and overstated advertising revenues to consistently defraud the banks for obtaining new loans, the probe agency said.

“In complete violation of the loan terms & conditions, DCHL utilised 73 per cent of the loan amounts only for the cyclical repayment of existing loans. Eventually, the loans turned into non-performing assets and DCHL defaulted on principal loans of around ₹3,000 crore and caused a total loss of ₹8,180 crore to the banks and other financial creditors, the ED alleged.

The bank money was also paid to charitable trusts, withdrawn and illegally returned to Deccan Chronicle promoters in cash. The company is accused of declaring and distributing dividends by showing fictitious profits and through that illegal route the promoters, two-third shareholders, pocketed around ₹143 crore among themselves.

They also allegedly rinsed “₹253 crore for buy-back of shares with an intent to bolster the stock prices and to project a financially rosy picture”. Earlier, the ED had attached movable and immovable properties of DCHL and its promoters and directors amounting to ₹386.17 crore in this case.

Shakti Bhog Foods case

In another case, the ED has provisionally attached 59 immovable and movable properties including 53 plots, commercial shops, industrial plots, agricultural land located at Delhi, Noida, Sonepat (Haryana), Jalandhar (Punjab), Hyderabad. Cash in bank accounts of ₹28.67 crore belonging to Sunil Dhupar, former CA and statutory auditor of Shakti Bhog Foods Ltd (SBFL), and his family members/companies, Indeep Singh Arora and his family members and accommodation entry operator Devender Kumar have also been attached under the Prevention of Money Laundering Act (PMLA), 2002, the ED. said

The ED initiated probe on the basis of an FIR registered by the CBI against Shakti Bhog Foods Ltd and others, for criminal conspiracy, cheating and criminal misconduct resulting in bank fraud of ₹3269.42 crore.