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Aug 15, 20239 min read

The DHFL Rigmarole: A Further Look(-back) Into the Matter: A Review

Posted on 15/08/2023 (GMT 07:30 hrs)

Updated on 16/08/2023 (GMT 17:30 hrs)

The present compilation focuses on a particular research-paper written by ADITI SHOBHA AND DIKSHA KUMARI, entitled “DHFL Scam and the Entire Rigmarole”, published in INTERNATIONAL JOURNAL OF LAW MANAGEMENT & HUMANITIES (Volume 4, Issue 3, 2021, pp. 6065-6075), focusing on the biggest financial scam of post-independent India, viz., the DHFL scam, as evident from the title of the paper. The paper provides an insight into the DHFL scam by focusing on certain highly relevant points such as Wadhawan Brothers’ role in the money laundering under the guise of 87 (approx.) shell companies. The paper also reveals the nexus of the Wadhawans with the ruling political party (along with the shadow economy of the so-called Mumbai “underworld”). We must congratulate and appreciate the fact that the authors of this paper dared to point out, in a straightforward manner, the role that the Bharatiya Janata Party (Henceforth BJP) played in this scam, among countless other scams.

It is also to be noted that after CAG recently revealed that much of the corruption happened actually during the BJP regime. For example, the PM-JAY scam by creating fake phone numbers and thereby diverting the funds. Same goes for the Ayodhya Development Plan scam, the Bharatmala project scam and so on.



We can neither file an RTI nor get any news from the mainstream media, i.e., the Godi Media, regarding this extremely high level of all-around corruption!


RTI DECEASED: THE STATE OF DEMOCRATIC  UNFREEDOM

On the specific issue of the DHFL scam (which has also not been reported by the mainstream, funded Godi Media⤡), this post shall attempt to provide a few relevant excerpts from the said paper in relation to some of the previous posts made on the platform of ONCE IN A BLUE MOON ACADEMIA (OBMA) in order to substantiate as well as extend the narrative presented in the paper, keeping in mind certain loopholes or shortcomings with which the paper suffers (which shall be pointed out at the end), provided that the paper was published in early 2021– when most of the DHFL Scam’s crisis-points were still under cover or foreclosed.

Too much water has gone under the bridge after 2021….!!!

Before going through the excerpts, it would be pertinent to provide the PDF of the complete paper as follows:

EXCERPTS FROM THE ABOVE PAPER WITH RELEVANT LINKS AND ADDED DESCRIPTION

  1. “…when DHFL lent money to shell companies, they did so without any mortgages. DHFL ensured that the recovery of such dubious loans is impossible since the companies or their promoters themselves do not own any assets.” And since there is no collateral, this money cannot be easily recovered. So, as a result when these companies faltered on repayment, no recovery process was initiated by Indian authorities under the Insolvency and Bankruptcy Code of India or SARFAESI Act. It was further found that 45 of these shell entities were divided into smaller companies with the same or similar addresses, directors, The loans were also disbursed in one single sum instead of in stages. Of the Rs 96,000 crore-worth loans DHFL borrowed from other banks like Bank of Baroda and State Bank of India and it allegedly drained Rs 31,000 to these shell companies.” (2021: 6067)

  2. “The investigation agency has accused Dheeraj Wadhawan and Kapil Wadhawan of sending this embezzled money which is worth thousands of crores to companies in Gujarat and Karnataka under the guise of schemes and programmes during state elections.” (ibid.)

It is just a compensatory process for the business tycoons as they have to square up the donations given to the hungriest ruling party of India, i.e., the BJP, the richest party of India.


Mousetrapped: An Open Letter to the Wadhawan Brothers

  1. “The CBI has filed a case against DHFL,its promoters Kapil Wadhwan and Dheeraj Wadhwan for siphoning off several thousand crore rupees in the name of Pradhan Mantri Awas Yojna (PMAY) by creating fake loan amounts and claiming interest subsidy. Auditor Grant Thornton has submitted its final forensic report on the DHFL scam to the RBI appointed administrator. The key findings of the report allude to lakhs of fictitious loan accounts, demand for recoveries amounting to Rs 14,046 crore, and deposits routed through an imaginary entity in Bandra.“

  2. “These all report takes forward the mode and operation of “round tripping” of funds through fake loans. Now the DHFL, is facing multiple investigations by various agencies.” (ibid., 6068)

  3. “Beyond personal controversy, the Wadhawans have also triggered serious political consequences with their scams. Kapil and Dheeraj Wadhawan have also been accused of sending this stolen money worth thousands of crores to companies in Gujarat and Karnataka under the guise of schemes during state elections. However, these projects have either been suspended or are on hold from municipal corporations.” (ibid., 6072)

It is to be noted that the Supreme Court has upheld the bail granted to the Wadhawan Brothers on the 27th of March, 2023, by the Bombay High Court and none of the accusations against them have yet been proved definitively. Moreover, they are only being tried in relation to Rana Kapoor’s YES Bank Case, not particularly with regard to the DHFL scam.

  1. “Further it was also claimed that the Wadhawan’s astronomical donations to the BJP comes from these loans. It has been alleged that Rs 19.5 crores of amount was given as donation to the BJP between 2014-15 and 2016-17 by RKW Developers Pvt. Ltd., Skill Realtors Pvt. Ltd., etc- companies “linked to the Wadhawans”. Additionally, some of the shell companies belong to the Sahana Group, of which former Shiv Sena MLA Dalvi Shivram Gopal is a shareholder.” (ibid.)

Despite providing donations to the BJP via Mumbai Underworld (Dawood Ibrahim, late Iqbal Mirchi and Chhota Shakeel), why are Kapil and Dheeraj Wadhawan still in the jail, when the 50+ superrich wilful defaulters and alleged rapists are roaming scot-free under political protection? The answer is but too mysterious.

WHAT DID THE PAPER SUGGEST IN ORDER TO PREVENT THE OCCURRENCE OF SUCH SCAMS?

  1. “On 22nd January, 2021, RBI proposed a 4- tier structure for NBFC for a tighter regulatory framework for NBFCs. According to the suggestions of RBI, by creating a four tier structure, it will give a progressive increase in the intensity of the regulation. The four layers will consist base layer, middle layer, upper layer and Top layer, keeping the layers in a pyramid form. The main reason behind naming the layers as such is to identify the category and status of the NBFC which will help in better regulatory provisions keeping the base layer filled with NBFC which would require least regulatory intervention and which are non- systemically important NBFCs. Then comes the middle layer including systemically important NBFCs, the NBFCs which take term deposits, housing finance, etc. and the regulatory regime for this layer would be a little stricter compared with that of the base layer. The upper layer of it will consist of systemically most significant NBFCs which are of large potential of systemic spill over of risks and which have the ability to even affect the financial stability. The regulatory framework for NBFCs falling in this category would be more precise and strict. Lastly, the top layer as suggested by RBI is for the NBFCs which are being pushed out of the Upper layer by way of supervisory judgment for even higher regulation or supervision. Ideally this layer of the pyramid will remain empty unless supervision take a view on specific NBFCs. For say, if certain NBFCs lying in the upper layer are seen to pos extreme risks as per supervisory judgment, they can be put to higher regulatory requirements.” (ibid., 6073)

However, can there really be such an accountable structure when an MA History is the Governor of the RBI?


Demanding Expulsion of Mr. Shaktikanta Das, Governor, The Reserve Bank of India: A letter to the President of India

Additions and Updates:

The paper, given its time boundaries (2021`), could not address certain highly pertinent points relating to the DHFL scam, some of which are mentioned as follows:

a) The role of Ajay Piramal as a secondary kin of India’s favoured business tycoon Mr. Mukesh Ambani in adversely possessing or occupying the DHFL by buying 45k crore worth of assets for only a rupee.

More on Ajay Piramal:

b) The various material irregularities/illegalities in the resolution process under the RBI-appointed Committee of Creditors (CoC) for DHFL as pointed out in the NCLAT’s second order on 27/01/2022.

More on the CoC’s corrupt exploits:

c) The alleged collusion between Dawood Ibrahim, late Iqbal Mirchi, DHFL, RKW Developers AND THE BJP by means of terror-funding/political donations/political charity in the context of crony and monopoly capitalism with the active involvement of the so-called “Shadow economy” has not been mentioned.

d) The paper is largely repetitive and descriptive in nature since it does not attempt to unveil the socio-political backdrop of the scam during the Mo-Shah regime, especially in connection with vote-bank politics.

e) It does not highlight the absence of the ex-promoters of DHFL, viz., the Wadhawans, in the decision-making process of the RBI-appointed CoC, as well as why the CoC constantly rejected the Wadhawans’ pleas for full repayment, as evidently pointed out by the NCLT in its first order dated 19/05/2021, that was superseded by the RBI-CoC in terms of a contempt of court by hurrying off to the NCLAT.

f) The paper also fails to address that even after the rigmarole regarding the Aadhaar-PAN linking process that was supposed to have solved the issue of fraudulent bank-account creations, how and why did the “Bandra Books” and other shell companies come into existence at all? Does not this point to the failure of the government machinery to ensure a corruption-free space of exchange?

Moreover, after the “successful” demonetization move by the present government with its promises of doing away with a) black money, b) counterfeit money and c) terrorism, how could the BJP itself get involved with such fraudulent transactions involving international terrorists?


AN OPEN LETTER TO MODIJI: THE HORNS OF THE DEMONETIZATION DILEMMA

g) It does not focus on the inconsistencies of the IBC Act itself, which has been amended multiple times in order to safeguard or strengthen the motives of the selected few corporate tycoons.

SEE ALSO:

For understanding the scam from the point of view of auditing discrepancies, view the following case-study:

In this context, we are forced to state: what were the vigilant agencies doing when such terror-funding or creation of shell companies were taking place? Were they high on sleeping pills or did they take LSD? It involves public money, hence– all the government agencies are accountable. Analogically speaking, why do we need CAA-NRC-NPR⤡ ⤡ when the BSF is already there?

The above study has to be viewed in relation to the following articles:

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