ED attaches Rs 122.15 crore assets of DCHL

The Enforcement Directorate (ED) on Friday attached assets worth Rs 122.15 crore belonging to Deccan Chronicle Holdings Limited (DCHL), two former promoters T Venkatram Reddy and T Vinayakravi Reddy, and a "benami" company floated by them in connection with Rs 8,180 crore loan fraud case.

The immovable assets attached consist of 14 properties in New Delhi, Hyderabad, Gurgaon, Chennai, and Bengaluru, and none of these are covered under the proceedings related to DCHL in National Company Law Tribunal (NCLT), the ED said in a statement.

This was the second attachment in the case and with this, assets worth Rs 264.56 crore have been attached under the Prevention of Money Laundering Act (PMLA).

The DCHL and its former promoters are facing a probe into the loan fraud of Rs 8,180 crore. DCHL is currently under the Corporate Insolvency Resolution Process (CIRP) in which a resolution plan for only Rs 400 has been approved by the NCL

The ED had started the money laundering probe against DCHL and its management in 2015 based on six FIRs and charge-sheets filed by the CBI. CCS Police Station had also filed a charge-sheet against DCHL while the SEBI had initiated a prosecution against it.

According to the ED investigations, three DCHL promoters P K Iyer, T Venkatram Reddy, and T Vinayakravi Reddy "hatched a well-planned conspiracy and manipulated" balance sheets by "inflating" profits-advertisement revenue while "grossly under-stating" financial liabilities. This was done to "paint a rosy picture for years to cheat" the banks and its shareholders.

"Balance Sheets were fudged and loans taken from one bank were hidden from other financial institutions. Over the years, 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," the ED statement said.

The ED also claimed that the loans taken for working capital requirements were diverted to "extravagant" projects "without the consent" of the banks and were "ultimately shown" as losses.

Substantial amounts were also diverted into subsidiaries that have "not done any legitimate business and also into the proprietary concerns" of the two ex-promoters without following any proper accounting.

"It is also revealed that the accused promoters received hefty kickbacks from the investment made by DCHL into M/s Odyssey at highly inflated values. The promoters ran the public listed company DCHL like their proprietary fiefdom throwing all norms of corporate governance to the wind. There were many suspicious donations to various Trusts," the ED added.

Despite the initiation of the CIRP process, the ED alleged, the accused promoters and their close family members continue to "yield indirect control over the print media and are working in senior capacities drawing large monthly salaries".

Besides seizing high-end vehicles, which were registered in the name of DCHL, from their possession, the agency claimed that 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 the front company.

"The net amount of loss caused to the banks/NBFCs/ Financial Institutions is estimated at Rs 8,180 Crore including the unpaid principal loan amount of approximately Rs 3,000 crore. So far assets totalling to Rs 264.56 crore have been identified and provisionally attached under PMLA," it added.