The Central Bureau of Investigation (CBI) has alleged that DHFL's promoters formed 87 shell companies, created more than 260,000 "fictitious borrowers" and set up a "virtual branch" to divert money borrowed from banks. In its charge sheet filed last month in connection with India's biggest bank fraud, involving ₹34,614 crore, CBI stated that Kapil and Dheeraj Wadhawan diverted funds and purchased 24 paintings worth ₹63 crore.
Taking cognisance of the charge sheet, a special CBI court last week ordered that all 75 accused in the case be summoned. "Investigation at the overseas level has also to be conducted to trace the trail of funds of DHFL," said the court order.
The charge sheet, a copy of which was seen by ET, said DHFL disbursed ₹11,765 crore to 87 shell companies between 2007 and 2017. It said the CBI investigation has revealed that the Wadhawans incorporated entities in the name of their employees, associates and friends.
Branch Code 001
They fraudulently and dishonestly used these entities as vehicles to divert funds availed from banks, from the accounts of DHFL to their own entities, said the charge sheet.
CBI said in the charge sheet that DHFL had many branches for loan disbursem*nt and that for disbursem*nt to these shell companies, the company created a specific code in the name of "Bandra branch."
"DHFL promoters deliberately transferred the funds in these companies when required by them for any business or personal use," said the charge sheet. "Most of these Bandra book companies did not have any project to avail loan from DHFL. The loans to these shell companies were disbursed with approval from Kapil Wadhawan. No formal process of loan appraisal or assessment, security, credit committee was followed in violations of applicable DHFL credit policies."
The agency said that "in order to camouflage the funds advanced to different shell companies and to account for them in the books of accounts of M/s DHFL, a branch with the name of 'Bandra branch' and code 001 was created in the software system and trial balance generated in old software system was manually fed against this branch (in the new software system) for reconciliation of the company's balance."
It said the "Bandra branch" with code 001 "did not exist physically and was a virtual branch created in pursuance of criminal conspiracy hatched amongst the accused promoters (for) siphoning of DHFL funds available from banks."
Continuing Probe
CBI informed the court that with regard to "ascertaining roles of remaining accused, namely businessman Sudhakar Shetty, M/s Amaryllis Realtors and M/s Gulmarg Realtors, remaining chartered accountants (who had audited the balance sheets of e-DHFL and shell companies and who had facilitated the promoters), ultimate beneficiaries/end use of diverted funds through shell companies and other Wadhawan group companies, DHFL officials, insider share-trading of DHFL shares, bank officials, NHB officials and other connected issues, is continuing."
The agency claimed that more than 260,000 fictitious borrowers were created by the Wadhawans using a software specifically programmed to generate dummy data showing entries of multiple retail home loans by randomly picking up names and addresses of already existing home loan borrowers of DHFL.
The charge sheet further said the Wadhawans, in conspiracy with the other accused, diverted funds for personal expenses such as renting chartered planes, foreign trips and credit cards.
