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A day after conducting raids on Deccan Chronicle Holdings Ltd (DCHL), the Central Bureau of Investigation (CBI) on Tuesday registered a case against T Venkattram Reddy, chairman of the Hyderabad-based media firm, for criminal conspiracy, cheating and forgery, based on a complaint filed by Canara Bank.
The investigative agency also named P K Iyer, vice-chairman, and Vinayak Ravi Reddy, managing director, who, together with Venkattram Reddy, form the promoters’ group. The company’s auditor, C B Mouli and Associates, was also named in the First Information Report (FIR).
In February this year, the state-run bank had filed a complaint with the CBI after it found several irregularities in the balance sheet of the company in a forensic audit. A forensic audit involves the application of accounting methods for collecting evidence for investigation and prosecution of wrondoing such as fraud.
The trouble started when the media firm started defaulting on loans to financial institutions and also allegedly created charge on shares and assets already pledged with others.
According to the FIR, during 2009-2011, the accused entered into a criminal conspiracy to cheat Canara Bank by availing of the open cash credit limit, with periodical enhancements and multiple short-term loans, aggregating Rs 1,230 crore from the bank. The promoters availed of excessive bank finance without adequate drawing power by allegedly giving false financial statements and suppressing the loans taken from other banks, according to the statement.The firm is now in debt of around Rs 4,000 crore.
It is also alleged that the accused utilised the short-term corporate loans for purposes other than for which these were sanctioned. In the FIR, it was further alleged that the company had filed fabricated balance sheets, concealing actual borrowings from Canara Bank and other lenders, besides alienating the property mortgaged to Canara Bank. The lender claimed a total loss of Rs 357.77 crore on account of the alleged fraud committed by the company.
As the present case only deals with the financial transactions between Canara Bank and the company, it is to be seen if the other banks and financial institutions who lent to the firm also follow suit and file similar complaints with the CBI. Many of these entities had already accused the firm of committing similar irregularities.
A CBI team comprising 25 members flew from Bangalore to conduct searches on the premises of DCHL and to continue the investigation.
