The Enforcement Directorate (ED) has arrested promoters and former directors of Deccan Chronicle Holdings Ltd (DCHL), T Venkattram Reddy and PK Iyer, and the company’s auditor Mani Oommen on June 13 over charges of siphoning off funds to the tune of Rs 9,805 crore sought under the pretext of business expansion.

The ED had attached movable and immovable properties of DCHL and its promoters and directors, totalling Rs 386.17 crore. The company is accused of declaring and distributing dividends based on fraudulent profits, and by doing so, the promoters, who own two-thirds of the company, pocketed about Rs 143 crore among themselves. 

They allegedly also spent Rs 253 crore for share buy-backs to boost stock prices and create a financially rosy picture. The bank was also paid to charitable trusts before being removed and unlawfully repaid in cash to Deccan Chronicle founders. 

ED investigation revealed that Deccan Chronicle Holdings Ltd had availed 111 credit facilities worth Rs 9,805 crore from 16 public sector and private banks on the pretext of working capital/business expansion requirements. However, DCHL took these loans based on fabricated books of accounts, and the company did not disclose its correct loan liabilities to the banks, the ED alleged.

“In complete violation of the loan terms & conditions, DCHL utilised 73% of the loan amounts only for the cyclical repayment of existing loans. Eventually, the loans turned into non-performing assets, and DCHL defaulted on principal loans of around Rs 3,000 crore and caused a total loss of Rs 8,180 crore to the banks and other financial creditors,” the ED alleged.

Funds were diverted to invest in the now defunct Deccan Chargers franchise of the Indian Premier League (IPL) to purchase a private aircraft by Reddy and a fleet of high-end cars worth more than Rs 30 crore by Iyer, the ED alleged.