Deccan Chronicle promoters diverted funds to invest in IPL team, buy private jet: ED

HYDERABAD: The Enforcement Directorate (ED), which arrested Deccan Chronicle Holdings Limited (DCHL) promoters T Venkattram Reddy and PK Iyer and auditor Mani Oommen in a bank fraud case, made sensational claims of siphoning off funds secured as loans from banks. It claimed that the promoters, T Venkatram Reddy and PK Iyer diverted the funds secured as loans from a consortium of 16 banks to invest in the Indian Premier League (IPL) team and purchase a private jet and luxury cars.

DCHL is accused of defrauding banks to the tune of Rs 8,180 crore. In a press release, the ED revealed that DCHL took loans from banks using fabricated books of accounts. The company also understated its financial charges and overstated advertising revenues. Funds secured as loans from the banks were diverted and siphoned off by the promoters of the company for various purposes, including:

Repayment of existing loans: DCHL used 73 percent of the loan amounts to repay existing loans.

Investment in subsidiaries and associated entities: DCHL invested in its subsidiaries and associated entities including the Indian Premier League (IPL) team Deccan Chargers.

Purchase of luxury assets: T Venkattram Reddy purchased a private aircraft, and PK Iyer purchased a fleet of high-end cars.

Payments to charitable trusts: DCHL made payments to charitable trusts, which were then withdrawn and returned to the promoters in cash.

Declaring and distributing dividends: DCHL declared and distributed dividends by showing fictitious profits.

Buy-back of shares: DCHL diverted Rs 253 crore to buy back shares, in an attempt to bolster the stock price and project a financially robust picture.

The ED has attached movable and immovable properties of DCHL and its promoters/directors amounting to Rs 386.17 crore. The investigation is ongoing.