CBI Books Deccan Chronicle Holdings in Rs 30 Crore Fraud

The FIR registered by the CBI also named CARE Rating Ltd and Infrastructure Development Finance Co Ltd.

The Central Bureau of Investigation (CBI).

(Photo: The Quint)

The CBI has filed a case against Deccan Chronicle Holdings Ltd (DCHL) and its Chairman T Venkatram Reddy for allegedly causing a wrongful loss of Rs 30.54 crore to United India Insurance Co Ltd (UIIC), an official said on Friday, 23 March.

The FIR registered by the Central Bureau of Investigation (CBI) on Thursday also named Mumbai-based private firms CARE Rating Ltd, Infrastructure Development Finance Co Ltd and two former officials of UIIC.

The Alleged Criminal Conspiracy

The UIIC officials – Deputy General Manager A Balasubramanian and Chief Manager KL Kunjilwar – made suspicious investments in the “privately placed short term unsecured redeemable non-convertible debentures issued by DCHL in 2011 in violation of the regulations.”

Balasubramanian and Kunjilwar entered into a criminal conspiracy in Chennai and other places to cheat UIIC and abused their official position as public servants by making the investments which was not repaid by DCHL, causing loss of Rs 30,54,25,350, said the CBI FIR.

“It is revealed that UIIC was investing the premium collected from the policy holders during the ordinary course of business in the form of shares, debentures, commercial papers, term loan etc in the public and private sector companies as per the investment policy guidelines based on the rules of Regulatory and Development Authority of India (IRDA),” the FIR said.

These investments are based on the rating made by Security and Exchange Board of India (SEBI) approved rating agency CARE Rating Ltd, it said.

“Investments Deliberately Made of 3 Different Occassions”

The FIR said the overall borrowing powers of DCHL was increased from Rs 700 crore to Rs 1,000 crore on the Board of Directors' annual general meeting held on September 29, 2007 and from Rs 1,000 crore to Rs 5,000 crore in a similar meeting on February 28, 2013.

"As on the date of issue of debentures, DCHL's total borrowings was Rs 3,755.70 crore."

According to the FIR, in the pursuance of the criminal conspiracy between July to October 2011, three office notes were put up by Kunjilwar for investment of Rs 10 crore each in 11.25 percent unsecured non convertible debentures issued by DCHL for purchase of short term unsecured debentures with 364 days maturity without analysing the proposal in detail and the same was approved by Balasubramanian.

"The investments were made in three different occasions deliberately in order to by-pass the investment committee of UIIC. Thus UIIC invested Rs 30 crore in DCHL. UIIC relied on the rating awarded by CARE Ratings Ltd,” said the FIR.

At the time of investment in 2011, the rating awarded by CARE Rating Ltd was PR1+ and at the time of redemption in 2012, the rating was drastically downgraded to D within a short span of one year.

"On the date of maturity in 2012, the principal amount with interest was not repaid by DCHL. DCHL had issued three cheques of Rs 10 crore each but when presented through encashment, they were dishonoured. Regarding which UIIC lodged a complaint against DCHL which is peding before court," the FIR said.

The Central Bureau of Investigation (CBI) has filed a case against Deccan Chronicle Holdings Ltd (DCHL) and its Chairman T Venkatram Reddy for allegedly causing a wrongful loss of Rs 30.54 crore to United India Insurance Co (UIIC), an official said on Friday.

The FIR registered by the CBI on Thursday also named Mumbai-based private firms CARE Rating ltd and Infrastructure Development Finance Co and two former officials of UIIC.

The UIIC officials – Deputy General Manager A Balasubramanian and Chief Manager Kl Kunjilwar – made suspicious investments in the "privately placed short term unsecured redeemable non-convertible debentures issued by DCHl in 2011 in violation of the regulations".

Balasubramanian and Kunjilwar entered into a criminal conspiracy at Chennai and other places to cheat UIIC and abused their official position as public servants by making the investments which was not repaid by DCHl, causing loss of Rs 30,54,25,350, said the CBI FIR.