Auditing firm TP Ostwal and Associates, which was appointed by mortgage lender Dewan Housing Finance Corporation Ltd. (DHFL) to probe into the allegations of media portal Cobrapost, has said there was no evidence that the company had promoted 26 shell companies that were borrowers as was alleged and there was no evidence of insider trading, either.
At the same time, the auditors noted that certain amount of loans extended by DHFL to four companies might have been used to purchase shares of Darshan Developers from Kyta Advisors.
“The company has sanctioned and disbursed loans aggregating to ₹2,000 crore to Notion Real Estate Private Limited, Earleen Real Estate Developers Private Limited, Prashul Real Estate Private Limited and Edweena Real Estate Private Limited as project loans for Slum Rehabilitation Authority (SRA) development. Further, our examination of available financial statements of Darshan Developers indicates that the shareholding has indeed undergone a change during the period of our review and it is highly probable that certain amounts lent to the 4 companies may have been used to purchase shares of Darshan Developers aggregating to ₹1,424.16 crore from Kyta Advisors and other instruments worth ₹299.28 crore (total ₹1,723.44 crore),” the auditing firm said in a report.
It was alleged that Kyta Advisors, promoted by the Wadhawan group, was earlier known as Wadhawan Realtors and was holding 49% in Darshan Developers.
The auditing firm verified the transactions and dealings by DHFL for the period April 1, 2015 to December 31, 2018. Shares of DHFL surged 20% after the report was made public to touch an intraday high, before closing at ₹148.8, up 11% from previous close.
The report said there were instances of deviations and non-adherence to the terms of sanction of loans having major risk implications, especially in relation to post sanction monitoring of funds use by borrowers.
“As such, non-compliances with the terms of the borrowing and possible diversion of funds, if any, by the borrowers would have escaped attention of the company,” it said. However, the report found no evidence to corroborate or support allegations of tax fraud perpetrated by the company.
