Cobrapost alleges ₹31,000 crore fraud, DHFL calls report mischief with mala fide intent

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DHFL Brand Logo   | Photo Credit: Wikimedia Commons


The website also alleged that donations of ₹19.5 crore were made to the BJP between 2014-15 and 2016-17 by three companies, even when they were not entitled to do so.

Investigative platform Cobrapost on Tuesday claimed to have unearthed a financial scam of more than ₹31,000 crore, alleging that the primary promoters of Dewan Housing Finance Corporation (DHFL), a non-banking financial entity, and their associate companies had committed a “systemic fraud” to siphon off public money.

Responding to the charges, DHFL issued a statement saying: “This mischievous misadventure by Cobrapost appears to have been done with a mala fide intent to cause damage to the goodwill and reputation of DHFL and resulting in erosion in shareholder value. DHFL today (Tuesday) received an email at 8.44 a.m., with a follow-up reminder one hour later, seeking answers to 64 questions from Cobrapost, many of which were laced with political innuendos.”

“Their entire approach raises serious concerns about the motivation of this so-called expose,” it said. DHFL said the company, which had received AAA credit rating from leading credit agencies, was fully tax compliant and its books are audited by global auditors.

“We understand, for the last several weeks, an anonymous note has been making the rounds with similar defamatory and scurrilous allegations. The real intent of this exercise appears to be to destabilise the company and the market equilibrium besides hampering our meeting the on-going obligations,” it said, also questioning the timing as the charges were levelled before the stock market closed and days before the interim Budget.

Cobrapost alleged that the “scam” was committed by giving out funds in secured and unsecured loans to “dubious” shell or pass-through entities, purportedly related to DHFL’s own primary stakeholders through their proxies and associates. The funds, as alleged, were re-routed to the firms allegedly controlled by them.

“The money has been used to buy shares/equity and other private assets in India and abroad, including in countries like the U.K., Dubai, Sri Lanka and Mauritius,” alleged Cobrapost at a press conference held by its editor Aniruddha Bahal and attended by former BJP leader Yashwant Sinha, lawyer Prashant Bhushan and journalists Paranjoy Guha Thakurta, and Prem Shankar Jha. It was alleged that a Sri Lanka Premier League cricket team had been bought using the loan “dubiously” advanced by DHFL.

Cobrapost claimed to have identified 45 companies that were allegedly used to siphon off funds. “Of these, 34 companies are so dubious that most of them have no business or income…many of these companies operate from the same addresses and are run by the same group of initial directors,” it alleged.

The allegations came on a day when DHFL announced that it had raised ₹1,375 crore from funds managed by Oaktree Capital Management.

Cobrapost alleged that by lending funds without due diligence, DHFL ensured that recovery was impossible as the firms or their directors did not own any assets.

“Thus, the only losers in the process would be the public sector banks, such as State Bank of India and Bank of Baroda, with an exposure of over ₹11,000 crore and ₹4,000 crore, respectively, foreign banks and shareholders from among the public or investors of DHFL,” it alleged.

The website also alleged that donations of ₹19.5 crore were made to the BJP between 2014-15 and 2016-17 by three companies, even when they were not entitled to do so. All these donors were linked to the promoters, it alleged.

DHFL, with a net worth of ₹8,795 crore, had taken loans of ₹96,880 crore. “Of this sum, the company has disbursed ₹84,982 crore in loans and advances to other entities. According to the annual report, DHFL has secured loans from at least 36 banks, including 32 nationalised and private and six foreign banks,” it alleged.

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Printable version | Jan 18, 2020 5:11:45 PM |

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