Investigative news portal Cobrapost has claimed that the primary promoters of DHFL siphoned off more than Rs 31,000 crore of public money in one of the biggest financial scams ever. The alleged scam was pulled off through grants of loans and advances to shell companies. Money was also allegedly routed through dubious companies and parked outside India to acquire assets.
Cobrapost claimed to have unearthed the scam by "closely scrutinising public records available with government authorities and information available in public domain". It accused DHFL and their associate companies of a "systemic fraud in broad daylight" to siphon off public money.
The portal has explained the 'anatomy' of the alleged scam saying it was pulled off mainly by "sanctioning and disbursing astronomical amounts" in secured and unsecured loans to dubious shell companies related to DHFL's own primary stakeholders Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan through their proxies and associates. The funds were allegedly passed on to companies controlled by the Wadhawans. The portal claimed the money was used to buy shares and private assets in India and abroad, including in countries like UK, Dubai, Sri Lanka and Mauritius.
"The anatomy of the scam, as illustrated in the expose, has repercussions for the larger financial system in India. As an industry practice, loans are advanced to companies and are secured by not only mortgaging the properties of the borrower company but also by personal guarantees of promoters of companies. 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," the portal said.
Cobrapost claimed that the private assets acquired by the Wadhawans and their associates were completely ring-fenced from any recovery process and that the public sector banks would be the big losers. "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."
DHFL has dismissed Cobrapost's allegations as "mischievous misadventure" done with a mala fide intent.
"DHFL today received an email at 8.44 a.m. in the morning, with a follow-up reminder one hour later, seeking answers to 64 questions from Cobra Post, many of which were laced with political innuendos. We are shocked and surprised to receive this inquiry this morning, although Cobra Post had announced its press conference last Friday, i.e. 25 January 2019, to disclose an alleged financial scam. One would have expected as a responsible media house CobraPost would have asked these questions during their investigations and not on the day of the press conference," DHFLS said.
It added: "Their entire approach raises serious concerns about the motivation of this so-called expose. It is necessary in public interest that if they believed in the genuineness of their issues to have given DHFL an opportunity to explain the facts that are in any case available in the public domain."
"Despite the recent liquidity regime, DHFL as a responsible corporate has met all its obligations to the lenders and has paid back to them in excess of Rs.17,000 crores in the last three months. 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 said.