T Venkattram Reddy, an ex-chairman and promoter of the Deccan Chronicle Holdings Limited's (DCHL), along with former chairman PK Iyer and statutory auditor Mani Oommen were arrested on Wednesday, June 14 by the Enforcement Directorate (ED) in relation to a bank fraud case. The ED has also attached Rs 386.17 crore in the case.
Fifty-three-year-old Venkattram Reddy is the former owner and promoter of DCHL. This company publishes the English daily Deccan Chronicle and other newspapers. Venkattram was made the chairman as well as editor-in-chief of Deccan Chronicle in 1993 after the demise of his father T Chandrashekar Reddy. A Congressman, Chandrashekar Reddy was a Rajya Sabha MP from 1981 until his death. Following his demise, Venkattram also served as Rajya Sabha MP for two years and then quit politics.
In 2013, the first of six FIRs was registered against Venkattram by the Central Bureau of Investigation (CBI) based on a complaint from Canara Bank, Bengaluru, over non-repayment of loans. He was subsequently arrested in 2015 with the alleged default of a Rs 357 crore loan from Canara Bank. Since then, the CBI has registered six FIRs against him and DCHL over charges of cheating and criminal conspiracy, and a money laundering investigation was launched by the ED based on the cases registered by CBI, Bengaluru and Telangana Police. A prosecution complaint filed by the Securities and Exchange Board of India against DCHL and others was also included in the scope of the PMLA investigation. The PMLA investigation revealed that Venkattram, along with the other promoters, directors, and in collusion with the statutory auditor, defrauded banks and non-bank financial companies (NBFC).
The ED said that DCHL had availed 111 credit facilities from 16 public sector and private banks, amounting to Rs 9,805 crore, under the pretext of working capital and business expansion requirements. These loans had been obtained based on fabricated books of accounts. Further, DCHL also did not disclose its true loan liabilities to the banks. It also revealed that loan funds were diverted and siphoned off by the company’s promoters in various ways.
The loans were diverted for the repayment of existing loans, which is in violation of the loan terms and conditions. Nearly 73% of the loan amounts were solely utilised for the cyclical repayment of existing loans. “Consequently, the loans turned into non-performing assets, and DCHL defaulted on principal loans of approximately Rs 3,000 crore, causing a total loss of Rs 8,180 crore to the banks and other financial creditors," the ED said. The ED also disclosed that Venkattram purchased a private aircraft, and Iyer used diverted funds to purchase a fleet of high-end cars worth over Rs 30 crore. Additionally, payments were made to charitable trusts, which were later withdrawn and illegally returned to the promoters of DCHL in cash.
“The promoters, holding up to two-thirds of the company’s shareholding, pocketed an amount of around Rs 143 crore among themselves by declaring and distributing dividends based on fictitious profits. Furthermore, Rs 253 crore was diverted for the buy-back of shares, intending to artificially inflate stock prices and present a financially favourable image,” the ED added.
(With IANS inputs)