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PMC Bank scam: ED charges HDIL promoters with Rs 2,500 crore diversion

In an over 7,000-page prosecution complaint, which is equivalent to a charge sheet, it filed in a Mumbai court on Monday, the central agency has accused the father-son duo of using the money for either purchasing real estate or for the “evergreening” of other loans, officials privy to the matter said.

, ET Bureau|
Updated: Dec 17, 2019, 08.26 AM IST
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Rakesh Wadhawan
MUMBAI: The Enforcement Directorate has charged Housing Development & Infrastructure Ltd (HDIL) promoters Rakesh and Sarang Wadhawan with laundering more than Rs 2,500 crore of the Rs 6,700 crore that the company had allegedly taken as loans from Punjab and Maharashtra Cooperative Bank between 2007 and 2013.

In an over 7,000-page prosecution complaint, which is equivalent to a charge sheet, it filed in a Mumbai court on Monday, the central agency has accused the father-son duo of using the money for either purchasing real estate or for the “evergreening” of other loans, officials privy to the matter said.

“The charge sheet was filed on Monday to prevent the accused from seeking bail for want of charge sheet,” said an official.

The Wadhawans were arrested on October 18 and the Prevention of Money Laundering Act allows the accused to seek bail if no prosecution complaint is filed within 60 days of the arrest.

The ED has also named the bank’s erstwhile chairman Waryam Singh and former managing director Joy Thomas, along with HDIL, as the accused in its document.

If found guilty, the Wadhawans and the former bank officials could face imprisonment of up to seven years apart from financial penalty.

The ED, a finance ministry wing, started investigating the money-laundering aspect of the case after the Mumbai Police filed an FIR naming several people, including former bank officials and the company promoters, in a Rs 4,355.50 crore alleged fraud at the cooperative bank.

A forensic report prepared by audit firm Grant Thornton later found that the loss caused to the bank was more than Rs 6,700 crore, including interest, the official said.

The ED is in the process of sending formal letters to authorities in Dubai and London, seeking information about what it terms as “proceeds of crime” diverted to those jurisdictions to buy real estate. This would be done after the court takes cognisance of the charge sheet, said the official.

The ED has provisionally attached two land parcels in Alibaug and Vasai, three flats in Mumbai’s Bandra suburb and also movable property including jewellery worth Rs 60 crore and 13 vehicles allegedly belonging to the Wadhawans.

According to officials, the ED had looked into loans which were availed of as overdraft by the real estate company between 2008 and 2013, and found that the promoters, in connivance with the accused bankers, allegedly operated masked accounts that were kept out of the bank’s core banking system. Subsequently, more than 21,000 firms were floated to make “accommodative entries” so as to escape the scrutiny of the investigators, they said.

The company had also allegedly misled the Registrar of Companies by making “accommodative entries” in its books about the dues to PMC Bank. On evergreening of loans, the ED probe has found instances where the alleged masked loans from PMC Bank were used to meet the debt obligations of other banks, officials said.

Among others, the ED had questioned Sarang Wadhawan’s wife, Anu, over her alleged shareholdings in companies based in tax havens. ED sources said she couldn’t provide satisfactory answers on those dealings.
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