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Hindustan Times
30-05-2025
- Business
- Hindustan Times
DHFL masked hundreds of crores diverted to shell firms: ED charge sheet
MUMBAI: Dewan Housing Finance Corporation Limited (DHFL) had developed a software that automatically split hundreds of crores diverted to its real estate arm through 87 shell firms into thousands of retail loans to mask the diverted amounts from banking regulators, according to the Enforcement Directorate's (ED's) charge sheet into the ₹34,614-crore bank loan fraud case linked to the company. The investigation has revealed that DHFL promoters Kapil and Dheeraj Wadhawan diverted around ₹11,548 crore from DHFL to 87 fictitious entities—known as Bandra Book firms—for business purposes and personal use. The brothers used the diverted funds to purchase 25 paintings and a sculpture worth over ₹63 crore, expensive jewellery, and a 20% stake in Pune-based Varva Aviation, among other items, the charge sheet said. The loans were sanctioned in the name of RKW Group, a company named after the initials of Kapil and Dheeraj Wadhawan's father, Rajesh Kumar Wadhawan, according to the charge sheet, a copy of which was seen by HT. While Dheeraj Wadhawan raised the fund requests, his brother Kapil approved the loans through emails without following any due procedure. A record of these transactions was maintained on an isolated computer that wasn't connected to the company's LAN network, the charge sheet said. The charge sheet named 17 people and entities, including Kapil Wadhawan, Dheeraj Wadhawan, and the RKW Group. According to the probe, Kapil Wadhawan managed DHFL's housing finance business, while Dheeraj looked after the real estate development business across Mumbai and Pune under the RKW Group. According to the charge sheet, when the Wadhawans needed funds for their real estate projects and several other personal expenses, they would send one-page letters or cryptic emails to a particular officer at DHFL. Kapil Wadhawan then approved the 'loan proposals' without following due procedure by simply replying, 'Okay, Approved.' The approved proposals were then forwarded to the concerned bank branch for money disbursal. The shell companies or Bandra Book firms were directly under the control of Kapil Wadhawan, according to the statement of Harshil Mehta, the former chief executive officer of DHFL. All the accounts of the Bandra Book firms were maintained on a single computer that was isolated and not connected with the housing finance company's LAN network, Mehta told the ED. The computer was allegedly handled by very few close associates of Kapil Wadhawan. The loans were then allegedly sanctioned as retail or home loans by bypassing all retail credit policy norms and without consulting the company's retail, property, legal or sales teams. Despite officially closing in 2004, the Bandra branch of DHFL was kept alive only because of the Wadhawan brothers' surreptitious instructions, the charge sheet said. As soon as the funds were illegally diverted to the group firms, they were then split into smaller amounts and recorded as retail or home loans for 260,000 fictitious loan accounts in the company's database management software, the charge sheet said. The software, called FOXPRO, would then automatically generate fake data of multiple small home loans—mostly using details of DHFL's earlier customers—in order to inflate the company's retail loan books for further funding. The ED's money-laundering probe against the company is based on a case registered by the Central Bureau of Investigation (CBI) on February 11, 2022. The CBI began its investigation after a consortium of 17 banks led by the Union Bank of India alleged that the DHFL promoters conspired with their associates and got the banks to sanction loans amounting to ₹42,871 crore between January 2010 and December 2019. The subsequent loan defaults allegedly resulted in losses of ₹34,615 crore to the consortium.
Indian Express
29-05-2025
- Business
- Indian Express
Closely guarded mechanism 'Bandra Book' used to divert Rs 11,549 crore: ED
IN ITS latest chargesheet in the Dewan Housing Finance Limited (DHFL) loan diversion case, the Enforcement Directorate (ED) has detailed how a closely guarded 'Bandra Book' mechanism using one computer with an old software, through which Rs 11,549 crore, part of loans given by banks were allegedly diverted. The ED filed its chargesheet (prosecution complaint) against 17, including DHFL directors Kapil and Dheeraj Wadhawan, and companies linked to them in connection with the Rs 42,871.42 crore loan given to them by a consortium of banks in 2010. The ED has also seized properties worth Rs 70.39 crore in the case, including 25 paintings by prominent artists and one sculpture, a helicopter, and two watches valued at Rs 5 crore, claiming that loan amount was diverted towards buying these. Among the evidence cited by the ED is that of the creation of Bandra Book, a mechanism involving one computer with no LAN connectivity to divert funds. The ED has said that DHFL, which was incorporated in 1984, went for digitisation of its records in 1993. At that time, there were around 10-12 branches across India and the digitisation involved computerising all borrower and loan accounts. The IT team developed a software for it, through which each branch installed the data manually. Since there was no internet connection at that time, the branches were not interconnected. After a few years, the system was upgraded. The Bandra branch had closed in 2004 but the accused kept it alive using the old system. The ED has alleged that the branch continued to be used for requesting loans and receiving funds, which were then used for personal interests. The older software generated several entries of smaller amounts whenever a big amount of loan was requested. The agency has claimed that this was operated from a computer which had no LAN connectivity, with the information limited to only a few employees, including an IT head. 'In this way, the Wadhawans of DHFL had illegally and fraudulently diverted approximately Rs 11549 from DHFL by falsifying its books of account and for inflating its retail/home loan book to their 87 controlled entities in the name of 2.60 lakh fake/non-existent individuals…during the year 2006 to 2017,' the ED chargesheet has said. The ED has claimed that audit reports too were compromised to enable these diversions. About the purchase of paintings, the ED has claimed that in 2017 and 2018, Kapil had participated in auctions and purchased 13 high value paintings and one sculpture from an auction house, in the name of his beneficially owned company, funds for which were diverted from the loans. The paintings include works by artists F N Souza, M F Hussain, S H Raza, Tyeb Mehta and others. The ED alleged that while the paintings cost a total of Rs 63.44 crore and Rs 40.07 crore were paid through the loan amounts. The agency also alleged that in 2019-2020, the Wadhawan family had purchased diamond jewellery worth Rs 175.29 crore, part of which was also paid from the loan amount. Special Judge A C Daga in an order on May 2 issued notices to all the 17 accused noting that there is a prima facie case to show that proceeds of crime were diverted. 'The DHFL was in the business of housing finance. They used to raise funds from banks, institutions, and disburse it to individuals. The employees and the accused helped the DHFL in preparing inflated books of accounts by way of showing thousands of fake home loans by inducing a consortium of banks,' the court said.
