HDIL promoters used loan to repay debts of other group firms, says ED

Housing Development and Infrastructure Limited (HDIL) promoters used the loan amount obtained from the fraud-hit Punjab Maharashtra Cooperative (PMC) bank to repay

Housing Development and Infrastructure Limited (HDIL) promoters used the loan amount obtained from the fraud-hit Punjab Maharashtra Cooperative (PMC) bank to repay debts of other group companies, business requirements, cash requirements, meet personal expenditures and for repayment of loans, the Enforcement Directorate (ED) claimed in its charge sheet in the multi-crore fraud.

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The ED on Monday filed its charge sheet, which runs into approximately 7,000 pages. The ED has pegged the worth of the fraud at ₹6,117.93 crore and named HDIL promoters Rakesh Kumar Wadhawan and his son Sarang, PMC Bank’s former managing director Joy Thomas and ex-chairperson Waryam Singh.

“Loans were sanctioned to different group companies. It has emerged that large funds were transferred to individuals, group companies and other entities, which is under probe,” ED claimed in its complaint, adding that Rakesh Kumar and Sarang are the sole beneficiaries of the loan. The ED has listed 19 subsidiary companies of HDIL group as allegedly used by the Wadhawans to launder money. The duo had obtained loans in the name of these companies.

Sarang, in his statement to ED, said the HDIL group in total has 52 companies. This, he said, includes entities that have either been acquired or created as Special Purpose Vehicles (SPV) for real-estate development. Darshan Majumdar, chief financial official of the HDIL group, told ED that as many as 23 companies are dormant or without any activities. He told investigators that many employees of HDIL group companies were made directors in associate companies.

The ED, in its probe, claimed that capital was transferred from one account to another without any rationale. The agency said a complex system was maintained by HDIL to avoid detection of default. “The overdraft loan was used by promoters for business expansion, purchase of yacht, airplane, high-end luxurious vehicles, investment in shares and purchase of real estate and personal consumption,” the agency claimed.

The complaint revealed that on most occasions, money obtained through the loan and overdraft from PMC bank, was used for repayment of loan of the other company. One of the witnesses has listed instances of use of loans to clear loans or dues of other companies.

Citing instances, the complainant revealed that, loans to Awas Developers and Serveall Construction (both the companies listed as accused) was used for settling the loan accounts of Mi Marathi Media Ltd.

In another instance, loan of ₹30 crore, to Excel Arcade (company listed as an accused) was used for payment of dues to Privilege Industries Ltd (company listed as an accused).

Similarly, loan worth ₹200 crore, given to Somerset Construction, was used to settle dues of Blue Star realtor, the company now being acquired by another bigger corporate group. Further, a loan worth ₹100 crore, given to Somerset was used to settle dues of Excel Arcade.

The agency claimed that the period of repayment of loans was very small that is, one day it was transferred to the said account and very next day the same was transferred to the original account where it was received. This the agency claimed, creates a bogus impression that the loan was repaid. In fact, the loan was repaid on the first day and again created on the second day, ED claimed.

“Actually by this modus operandi, loan was repaid, but it helped in creating a belief that the party has first repaid the loan and at a later stage, out of business requirements, new loan has been availed,” ED claimed in its complaint, explaining the method through which a complex system was created.

Further, Sarang in his statement said that in 2015, they had created a personal trust for management of the assets of the Wadhawan family. “A personal trust was formed in 2015, for the assets of the family where his son Abhay and daughter Sana are beneficial owners,” Saran said in his statement to ED.

ED has claimed that the trust at present owns immovable properties worth ₹193.65 crore. The same have now been attached by ED. While the family, as per ED, owns precious jewellery and valuables worth ₹63.75 crore.

Further, the agency claimed that Malti Wadhawan, wife of Rakesh, owns four properties in the state, which are - 15, Neeta Terrace, Pune, ; 1/3 share in 32 - A, Union Park, Bandra ; flat No 2-A, Golf Link, Union Park, Bandra and Dewan Villa inherited by her husband. However, she claimed that she did not know source of income by which properties were purchased.

The agency has listed three properties located in the city, which are in the name of Anu Wadhawan, wife of Sarang. These properties include bungalow at 32 - A, Union Park, Bandra; flat in Golf Link, Bandra and bungalow in Vasai and Alibaug. The agency claimed that she is not a director in any companies, but works as a retainer (marketing) with Privilege Industries, which is engaged in manufacturing a beer. She gets ₹70 lakh per month as salary