Promoters and former directors of Deccan Chronicle Holdings Ltd arrested for bank fraud

Promoters and ex-directors of Deccan Chronicle Holdings Ltd (DCHL), T. Venkattram Reddy and P. K. Iyer, together with statutory auditor Mani Oommen were arrested by the Enforcement Directorate (ED) in a bank fraud case, according to a statement made by the ED. Investigations found that the DCHL, along with its promoters, directors, and the statutory auditor, allegedly defrauded banks and Non-Banking Financial Companies (NBFCs) through various means. The DCHL has secured up to 111 credit facilities from 16 public sector and private banks, amounting to INR 98.05bn ($1.3bn), under the guise of working capital and business expansion requirements. The ED discovered that these loans were obtained using fabricated books of accounts while the true loan liabilities were not acknowledged by the DCHL to the banks. Furthermore, the company’s promoters and directors allegedly underreported financial charges and overreported advertising revenues to secure new loans, prompting the investigators to conclude that loan funds were diverted and siphoned off in different ways and different purposes. Consequently, the loans deteriorated into non-performing assets, and DCHL defaulted on principal loans worth around INR 30bn ($404.18m), leading to a loss of approximately INR 81.80bn ($1.10bn) to the banks and its other financial creditors. The ED also revealed that the DCHL promoters pocketed INR 143 crore ($19m) by declaring fictitious profits, among other illegal activities. The investigation is still ongoing, as the ED works to trace and seize movable and immovable properties owned by the accused.