DHFL scam: The family accused of the biggest banking fraud knows how to stay out of jail

On Wednesday this week, the CBI booked Dewan Housing Finance Limited or DHFL and its Directors Kapil Wadhawan, Dheeraj Wadhawan and others for allegedly defrauding 17 banks of Rs 34,615 crore. This is the biggest case of bank fraud ever registered by the CBI.
Only ABG Shipyard comes close; it was booked for defrauding banks of Rs 23,000 crore.

DHFL promoters, including the Wadhawan brothers, are already under investigation by both the CBI and the Enforcement Directorate (ED) in a case of alleged fraud involving Yes Bank.

In March-April this year, both India Today and The Print reported how two years have passed since Dheeraj Wadhawan was arrested in connection with the Yes Bank money laundering case, but he has spent more time in a luxury hospital than behind bars.

Since his arrest on 26 April 2020, for allegedly getting investments of Rs 3,700 crore from Yes Bank for DHFL in exchange for “substantial undue benefit” to bank CEO Rana Kapoor and his family, Wadhawan has been repeatedly denied bail but spent only about nine months in jail.

For the remaining 15 months or so, he has divided his time between hospitals, citing a succession of ailments. These stays have included a 10-month stint at Mumbai’s plush Kokilaben Dhirubhai Ambani Hospital.

Wadhawan repeatedly petitioned the courts and when such appeals failed, the Maharashtra Human Rights Commission, to get himself into hospital.

Covid holiday
Prior to the arrest in 2020, the Wadhawans made headlines when they managed to evade the Covid lockdown in Maharashtra with the help of a senior IPS officer.

The Wadhawan family, along with others, travelled from Khandala to their farmhouse in Mahabaleshwar in their cars, even when both Pune and Satara districts were in lockdown for containing Corona. Weeks ago, they had skipped summons to appear for questioning in the money laundering investigation, citing COVID-19. "Health is a priority," they claimed after their no-show.

That was forgotten when the brothers, their families, cooks and helps, drove 180 km from Khandala to Mahabaleshwar for a holiday, bundled into two Range Rovers and three Fortuners, reported NDTV.

There was outrage over the special passes given to the brothers, who were under investigation over multiple fraud charges.
Their controversial journey was facilitated by Amitabh Gupta, Principal Secretary, Home, Maharashtra government, who was sent on compulsory leave.

Runs in the family
ET drew a detailed profile of the Wadhawan family in November 2019, tracing the family tree.

DHFL and HDIL are realty and housing finance businesses run by two branches of the family. Rakesh Wadhawan of HDIL is the younger brother of the late Rajesh Wadhawan, whose children Kapil and Dheeraj now run DHFL. The Economic Offences Wing of the Mumbai Police says Rakesh Wadhawan and his son Sarang Wadhawan, aka Sunny Dewan, promoters of realty firm Housing Development and Infrastructure Ltd (HDIL), defrauded Punjab and Maharashtra Cooperative Bank (PMC) to the tune of more than Rs 4,500 crore, in collusion with bank officials.

On the DHFL brothers, the ET profile said Kapil is the professional, sober face of DHFL, and can be seen fielding questions on business television and analyst calls. Younger brother Dheeraj Dewan is well known in Mumbai as Baba Dewan, for his close friendships with Bollywood stars and among auto enthusiasts for the fabulous cars he is seen in, also flanked by body guards.

DHFL’s troubles started after a Cobrapost sting operation alleged in January 2019 that the company had siphoned off money to related entities, and credit rating agencies started downgrading its paper in June 2019. DHFL started defaulting on its repayments in July. Cases were filed against DHFL by depositors. One was filed by IAS officer Ashok Khemka on behalf of his wife at the Chandigarh High Court while the other one was by Edelweiss AMC in Bombay High Court, with the latter asking DHFL to temporarily stop repayments of its deposits.

DHFL was a deposit taking shadow bank. This means quite apart from lakhs of stockholders whose investments have evaporated, its troubles affect lakhs of customers who have fixed deposits with them and holders of bonds and debentures, apart from banks that have lent very large sums. State Bank of India, for instance, has an exposure of Rs 11,000 crore to DHFL.