Enforcement Directorate(ED) has provisionally attached immovable assets totaling to Rs. 122.15 Crore under the Prevention of Money Laundering Act, 2002 (PMLA) in a loan fraud case. The attached assets belong to M/s Deccan Chronicle Holdings Limited (DCHL) and two of its former promoters namely T Venkatram Reddy and T Vinayakravi Reddy and that of a benami company floated by them. The immovable assets are consisting of 14 properties located in New Delhi, Hyderabad, Gurgaon, Chennai, Bangalore etc. All these attached assets are not covered under the NCLT process. This is the second attachment in this case. After this attachment in addition to the earlier attachment, the total amount of assets attached so far are worth Rs 264.56 crore.
The Investigations under PMLA were initiated by the ED against M/s DCHL and its management in the year 2015. They were based on 6 FIRs and corresponding charge sheets filed by CBI, BS&FC, Bangalore. Another charge sheet has been filed by CCS Police and a prosecution has also been filed by SEBI against M/s DCHL. The total loan fraud committed by M/s DCHL and its promoters is estimated to be Rs. 8180 Crore. M/s DCHL is currently under the CIRP process in which a resolution plan for only Rs 400 Crore has been approved by the NCLT.
Investigation conducted under PMLA revealed that the three promoters of DCHL namely P K Iyer, T Venkatram Reddy and T Vinayakravi Reddy hatched a well planned conspiracy and manipulated the balance sheets of the company inflating the profits-advertisement revenue and grossly under-stated the financial liabilities of the company to paint a rosy picture for years to cheat the Banks and its shareholders. Balance Sheets of the company were fudged and loans taken from one Bank were hidden from other financial institutions. Over the years, M/s DCHL availed credit facilities to the tune of more than Rs 15,000 crore. Money trail investigation revealed that most of the loans were cyclically rotated into group companies and were diverted to pay back older loans. Loans taken for working capital requirements and for business needs of M/s DCHL were diverted to extravagant projects and the diverted funds which were so invested into new projects without the consent of the Banks and were ultimately shown as losses. Substantial amounts out of the loans were diverted into subsidiaries which have not done any legitimate business and also into the proprietary concerns of the two ex-promoters without any proper accounting. It is also revealed that the accused promoters received hefty kickbacks from the investment made by M/s DCHL into M/s Odyssey at highly inflated values. The promoters ran the public listed company M/s DCHL like their proprietary fiefdom throwing all norms of corporate governance to wind. There were many suspicious donations to various Trusts.
ED investigation under PMLA has also revealed that despite the initiation of the CIRP process, the accused promoters of M/s DCHL and their close family members continue to yield indirect control over the print media and are working in senior capacities drawing large monthly salaries. ED has seized high end vehicles which were registered in the name of M/s DCHL from their possession. The promoters were also found to be re-purchasing the mortgaged assets at discounted rates through private treaties by using concealed proceeds of crime through front company. The net amount of loss caused to the banks, NBFCs, Financial Institutions is estimated at Rs 8180 Crore including the unpaid principal loan amount of approximately of Rs 3000 crore. So far assets totaling to Rs. 264.56 crores have been identified and provisionally attached under PMLA.