CBI books DHFL’s Wadhawans in biggest-ever mortgage fraud

In the biggest-ever mortgage fraud case in India, the CBI has booked former promoters of Dewan Housing Finance Corporation Ltd (DHFL), Kapil Wadhawan and Dheeraj Wadhawan, amongst 13 accused for defrauding a consortium of 17 banks of over Rs 34,000 crore. Until now, the Nirav Modi-led PNB mortgage fraud (Rs 13,000 crore) and ABG Shipyard mortgage fraud (Rs 20,000 crore) had been thought of to be the most important.

The company, sources stated, is conducting searches at 11 places throughout the nation at premises related to the accused.

The CBI case has been registered on a grievance from Union Bank of India (UBI), which is the lead financial institution within the consortium. According to the UBI grievance, since 2010, the DHFL has prolonged credit score services of over Rs 42,000 crore by the consortium of which Rs 34,615 crore stay excellent. The mortgage was declared NPA in 2019 and fraud in 2020.

A forensic audit performed by the KPMG in 2020-21 of DHFL mortgage accounts noticed that “large amounts were disbursed as loans & advances by the borrower company to a number of inter-connected entities and individuals with commonalities to DHFL Promoter Entities, which were used for purchase of shares/debentures.”

According to the KPMG report, a lot of the transactions of such entities/people had been within the nature of investments in land/properties.

Apart from Wadhwans, the CBI has booked Sudhakar Shetty of Suhana Group and 10 different actual property firms.

The UBI has alleged that the KPMG audit signifies “significant financial irregularities, diversion of funds through related parties, fabrication of books to show fraudulent non-existent retail loans, round tripping of funds and utilization of diverted amounts for creation of assets by Sh. Kapil Wadhawan, Sh. Dheeraj Rajesh Kumar Wadhawan and their associates.”

According to KPMG studies, as many as 66 entities, which had been associated to the DHFL and the Wadhawans, had been superior loans to the tune of practically Rs 30,000 crore by flouting all norms.

Of these 65 entities, Kapil Wadhawan alone managed about 40 entities by the use of appointing administrators and auditors, dealing with earnings tax notices, sustaining secretarial information of those entities and managing total management over funds of those firms, the CBI FIR has alleged.

The DHFL defaulted on its debt cost obligations from May 2019 onwards. However, nicely earlier than that, various NBFC firms confronted issues in elevating funds, pursuant to the default in commitments by IL&FS Group issues. This was adopted by a pointy correction within the share value of the DHFL. As banks raised questions with respect to the monetary well being of the corporate, Wadhawans claimed that the autumn in share value was on account of sale of business papers by considered one of its traders and maintained that the DHFL held a robust liquidity equated to 6 months of money and would stay money surplus even after contemplating all reimbursement obligations for the Financial Year 2018-19. However, these turned out to be faux assurances, in keeping with the FIR.

Wadhawans are dealing with a number of CBI and Enforcement Directorate instances because the collapse of the corporate in 2019 and have additionally been earlier arrested within the Yes Bank case.