CBI books DHFL’s Kapil, Dheeraj Wadhawan in bank fraud case, conducts raids

This is the biggest ever bank fraud probe that the agency has undertaken.

The Wadhawans’ office and residence were among the places raided after the registration of the First Information Report (FIR) against them on Monday. In the FIR filed, the agency said the promoters of DHFL allegedly conspired with others, including public servants, and induced the banks to sanction and disburse loans worth ₹42,871 crores between 2010 and 2018. One Sudhakar Shetty and 10 companies have also been named.

Piramal Group last year took over control of DHFL through the corporate insolvency resolution process.

The FIR said the Wadhawan brothers diverted the funds to entities they controlled by sanctioning loans to them without due diligence or obtaining adequate securities through falsification of books of accounts, causing a loss of ₹34,614.88 crores to the consortium.

According to the Union Bank of India’s complaint to the CBI cited in the FIR, a special review was carried out when the DHFL started defaulting on payments to the lenders in May 2019. DHFL allegedly falsely assured them about the company’s financial condition, saying that it had enough liquidity.

The complaint referred to a forensic audit and the review. “The special audit review and forensic audit report indicate significant financial irregularities, diversion of funds through related parties, fabrication of books to show fraudulent non-existent retail loans, round-tripping of funds, and utilization of diverted amounts for creation of assets by Kapil and Dheeraj Wadhawan and their associates.” It said most of the transactions of such entities/individuals were in the nature of investments in land/properties.

The investigators said they have traced 66 entities used for diverting the bank funds totalling ₹ 29,100 crore by the Wadhawans. Of the entities, 40 were controlled by Kapil Wadhawan, they added.

Advocate Rohan Dakshini, who represents the Wadhawans, said the entire matter is already being litigated in the Supreme Court and the National Company Law Appellate Tribunal. “The appellate tribunal [in January] asked the lenders to reconsider their decision regarding the valuation of DHFL’s avoidance transactions. And now, the CBI has registered a case. The fundamental fact is projects linked to these loans have value, which has been ignored.”

The FIR said the State Bank of India (SBI) has been cheated of the highest amount ( ₹9898 crore), followed by Bank of India ( ₹4,044 crore), Canara Bank ( ₹4,022 crore), Union Bank of India ( ₹3,813 crore), Punjab National Bank ( ₹3,802 crore) and the Bank of Baroda ( ₹ 2,036 crore).

Other consortium banks allegedly cheated between ₹71 crore to ₹1,499 crore include Bank of Maharashtra, the Federal Bank, Central Bank of India, IDBI Bank, Indian Bank, Indian Overseas Bank, Karnataka Bank, Punjab and Sind Bank, South Indian Bank and UCO Bank.

Officials said this is biggest-ever bank fraud case for the CBI after the one involving ABG Shipyard Limited. In February, the CBI booked ABG and its chairman Rishi Kumar Aggarwal of cheating an ICICI Bank-led consortium of 28 banks of ₹22,842 crore.

DHFL promoters are facing investigations in cases including the Yes Bank fraud case involving Rana Kapoor and the one related to the alleged creation of 2.60 lakh fake home loan accounts under the Pradhan Mantri Aawas Yojana ( ₹14,046 crores). The Wadhawans are accused of paying a kickback of ₹600 crore to Yes Bank founder Kapoor.