DHFL: Frequent frauds

DHFL: Frequent frauds

Shares of the crisis-ridden non-banking finance company DHFL slumped 4.9% to Rs 39.65 apiece on NSE after its auditor unearthed a fraud.
On Sunday, DHFL said that a fraudulent transactions of Rs 1,058.32 crore by way of undervaluation, fraud and preferential treatment to certain entities have been detected by transaction auditor Grant Thornton (GT).
Based on the report by GT, the Administrator of DHFL has filed three applications before the Mumbai bench of the National Company Law Tribunal on December 12.

The first application relates to disbursements made by DHFL to certain borrowers including El Dorado Biotech, Fortune Broking Intermediary, Fortune Gilts and Black Rock Financial Services, in the form of loan against property. This was used for premature redemption of NCDs held by certain other entities. This transaction took place during April and August 2019 and involves Rs 592 crore towards outstanding principle.
The second application is for diverting excess funds from DHFL’s account for “purported consideration” towards purchase of NAPHA property by the company. The excess amount paid for the purchase was Rs 330.31 crore. The funds were then further diverted to entities that are linked to the promoters and ex-directors of DHFL. According to the report, this took place during during 2009-10 to 2016-17.

The third application is regarding Inter Corporate Deposits by DHFL to Shrem Investments and Shrem Construction and the execution of a pledge agreement pursuant to which the NCDs of DHFL were pledged to secure the due repayment of ICDs, which occurred in 2018-19. This involves Rs 71 crore towards outstanding principle.
The three applications have been filed against 34 respondents including Kapil Wadhawan and Dheeraj Wadhawan.
Earlier in September, a forensic audit by Grant Thornton into the affairs of DHFL had unearthed fraudulent transactions of over Rs 17,000 crore, including approximately Rs 14,046 crore, as the amount outstanding in the books of the company as on June 30, 2019 and additionally ₹3,348 crore being the amount considered as due and outstanding towards notional loss.

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