Yashwant Sinha, Prashant Bhushan and others on Cobrapost’s Expose on what they claim is “India’s biggest financial scam.’Posted by The Quint on Tuesday, January 29, 2019
An investigation by Cobrapost claims, Dewan Housing Finance Corporation Limited (DHFL) through layers of shell companies allegedly siphoned off Rs 31,000 crore out of total bank loans of Rs 97,000 crore.
Cobrapost Expose Has Malicious Intent: DHFL
DHFL in a statement said the company is a publicly listed housing finance company and is regulated by the National Housing Bank and the Securities and Exchange Board of India, amongst other regulators.
“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,” the company said in a statement.
DHFL is a responsible and law-abiding corporate citizen and all loans are disbursed in the normal course of business in accordance with industry best practices and in compliance with all regulatory norms, the company statement said.“The company’s financial statements are submitted to the Stock Exchanges and are in the public domain. DHFL and its group companies are confident of meeting any scrutiny on any aspect of our operations and will pursue these frivolous allegations to its logical conclusion.”DHFL said in a statement.
DHFL has a strong corporate governance regime and has received AAA credit rating from leading credit agencies. The company is fully tax-compliant and its books are audited by global auditors, it added.
What Does Cobrapost Expose Claim?
The exposes alleged that the scam has been pulled off mainly by sanctioning and disbursing astronomical amounts in secured and unsecured loans to dubious shell/pass-through companies, related to DHFL’s own primary stakeholders Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan through their proxies and associates, which have in turn passed the money on to companies controlled by the Wadhawans.
“The money has been used to buy shares/equity and other private assets in India and abroad, including in countries like the UK, Dubai, Sri Lanka and Mauritius,” it said.
The expose claimed that by lending to shell/pass-through companies without due diligence, DHFL has ensured that the recovery of such dubious loans is impossible since the companies or their directors themselves do not own any assets.
This way the private assets acquired by the Wadhawans and their associates by using the funds from these dubious loans are completely ring-fenced from any recovery process that may be initiated by authorities under the SARFAESI Act or Insolvency and Bankruptcy Code of India, it claimed.
“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 Rs 11,000 crore and Rs 4,000 crore, respectively, foreign banks and shareholders from among the public or investors of DHFL,” it alleged
‘Shell Entities Donating Money to BJP Did Not Declare it’
Cobrapost claims that the alleged scam took place between 2015-2018. According to them, in 2014-15 and 2015-17, promoters DHFL had made political contributions to BJP India. While BJP had declared the Rs 19.5 Cr donations to the Election Commission of India, the shell entities donating the cash did not do so.
News agency Cobrapost held a press conference on Tuesday, 29 January, at the Press Club of India in New Delhi, to unveil what they claimed was India’s ‘biggest financial scam.’ The team claimed that all the scam was unearthed with details and paper available on public domain and not a sting operation.
Former Finance Minister Yashwant Sinha, journalists Prem Shankar Jha, Hemindra Hazari, Josy Joseph, Paranjoy Guha Thakurta, Cobrapost editor Aniruddha Bahal and senior advocate Prashant Bhushan were part of the panel.
DHFL Advanced Loans to 5 Companies in Gujarat Before State Elections for Incomplete Projects: Probe
The probe carried out by Cobrapost also allegedly reveals that DHFL had advanced loans worth Rs 1,160 to five companies in Gujarat before state elections in December 2017. But the projects, the probe claims, have either been cancelled or were stalled indefinitely.
Demanding a probe, Former finance minister Yashwant Sinha said, “If the government fails to order an immediate investigation into the allegations into the aspects including political funding, it would raise a question mark on the intent of the government. Therefore, I demand investigation under court supervision by a special investigative team.”
Sinha also said the exposes raise question mark on the claims of the government of nailing down of lakhs of shell companies.
All the agencies including regulators of the government have failed to track nefarious deals, he said.
Citing exposes, he alleged that political donations were received by a political party.