The CBI on Thursday registered an FIR, naming Deccan Chronicle Holdings Pvt. Ltd (DCHL), its chairman, and two officials of the United India Insurance Company Ltd (UIIC) as accused for allegedly causing a loss of Rs. 30.54 crore loss to the public sector insurance firm.
The FIR, filed at the CBI’s Anti-Corruption Branch in Chennai, alleged that two officials at the UIIC office on Whites Road, Chennai, helped DCHL and T. Venkattram Reddy cheat the UIIC.
The two UIIC officials - A. Balasubramanian (then-deputy general manager, Investment Department) and K.L. Kunjilwar (then-chief manager, Investment Department) have been named as accused one and two respectively; DCHL and Mr. Reddy are accused three and four.
The FIR accused the first two accused of “abusing their official position as public servants” and making “suspicious investments in the privately-placed short term unsecured redeemable non convertible debentures” issued by DCHL during 2011. This was in violation of the laid-down regulations, instructions and procedures.
During July-October 2011, three office notes were put up by Mr. Kunjilwar for Rs. 10 crore each “without analysing the proposal in detail.” Mr. Balasubramanian approved them. “The investments were made on three different occasions deliberately to by-pass the Investment Committee of M/s UIIC,” the CBI said. When the debentures were due in 2012 after its 364-day maturity period, the three cheques - of Rs. 10 crore each, given by DCHL to UIIC - were dishonoured.
The CBI blamed the UIIC for not performing separate risk analysis or due diligence and for not obtaining an appraisal report from a financial institution. Instead, UIIC relied only on the highest-possible PR1+ rating awarded to DCHL’s short-term debt instruments by the Securities and Exchange Board-approved ratings agency CARE.
By the time the debentures matured in 2012, CARE had downgraded its rating for DCHL to CARE D, its lowest-possible rating. The CBI has named CARE as the fifth accused.
Infrastructure Development Finance Company Ltd., which facilitated the investment in a sole arranger role, has been named as the sixth accused.
All six accused have been charged under Section 120-B (criminal conspiracy) read with Section 420 (cheating) of the Indian Penal Code. They have also been charged with Section 13(2), read with 13(1)(d), of the Prevention of Corruption Act.
