The owners of Deccan Chronicle Holdings Ltd (DCHL), the Reddy brothers – Tikkavarapu Venkatram and Vinayak Ravi were arrested in Hyderabad, on Saturday evening by the Central Bureau of Investigation (CBI) over their alleged defrauding of state-owned Canara Bank to the tune of Rs 357.77 crore.
The owners and promoters of English newspapers Deccan Chronicle, Asian Age and Finance Chronicle and Telugu newspaper Andhra Bhoomi, are alleged to have entered into criminal conspiracy, with the intent to defraud banks over loans aggregating to around Rs 5,000 crore.
Tikkavarapu Venkatram was the chairman of DCHL, while his brother Vinayak Ravi acted as the vice-chairman and managing director. Charges have been filed against P K Iyer, vice-chairman, though he is yet to be arrested.
Reddy Brothers Hubris
The Reddy brothers are facing a burgeoning list of lawsuits, on civil and criminal charges, over funds raised to meet investment requirement, including in the ill-fated IPL team, Deccan Chargers, which was later relinquished. Other holdings included a retail chain under the Odyssey brand and an aviation venture, reported BusinessLine.
They also owned one of India's enviable collections of contemporary sports and luxury cars, and Venkattram is a Steward of Hyderabad race club, where he also sponsors horse racing.
The CBI's Banking Security and Fraud Cell from Bangalore quizzed the Reddy brothers at the DCHL office, and later escorted them to the local CBI headquarters in Koti for further questioning.
After two more hours of investigations, the brothers were arrested and charged under IPC 120 B (criminal conspiracy), 420 (cheating), 468 (forgery) and 471 (using forged documents as genuine).
Following the arrest, they were produced at the Osmania General Hospital for a medical check-up, and later produced before the local magistrate at his residence.
The DCHL's promoters had ignored previous summons and notices issued by the CBI to appear for investigations. Apart from the Canara Bank fraud, four other FIRs have been filed on similar charges by other banks.
Canara Bank Case
The CBI filed the Canara Bank FIR in July 2013 on charges of criminal conspiracy for cheating the state-owned bank.
"In furtherance of the conspiracy, the accused had availed Open Cash Credit limit with periodical enhancements and multiple short term corporate loans aggregating Rs 1,230 crore (approx) from Canara Bank, thereby availing excessive bank finance without adequate drawing power by allegedly submitting false and fabricated financial statements and by suppressing the borrowings taken from other banks," said the CBI statement issued in July 2013.
The charges explained that DCHL utilised short-term corporate debt and diverted the funds towards other unstated purposes, in clear violation of the terms of the credit facility, reported the The Times of India.
"They did not repay the credit limits and also the investments aggregating Rs 20 crore made by the bank in Non Convertible Debentures of the company. Further, the company had submitted false and fabricated balance sheets concealing its actual borrowings from Canara Bank and other banks and had also alienated the security hypothecated/mortgaged to Canara Bank. The total loss allegedly caused to Canara Bank is to the extent of Rs 357.77 crore (approx) as on 08.09.2012," the CBI statement said.