Unsecured illegal investments to the tune of 4,122.70 crore from the provident fund (PF) corpus of Uttar Pradesh power employees in scam-hit Dewan Housing Finance Corporation Limited (DHFL) has taken a dramatic twist when the investigation into the scam was handed over to Central Bureau of Investigation (CBI). CBI will start the entire investigation afresh after getting the nod of the trial court. The Enforcement Directorate (ED) is already probing the case.
The unusually delayed decision of the government came at a time when Economic Offence Wing (EOW) concluded its investigation and filed charge sheet against 16 accused. However, top bureaucrats at the helm of affairs and responsible for decision making process tactfully escaped the heat of the fraud. Now a fresh investigation by CBI may land them in serious troubles. Presumably both the agencies-CBI and ED would also track down the immoveable assets, acquisition of Benami properties, ill-gotten black money and cases of money laundering.
EOW had not charge-sheeted any IAS officers in the huge scam. Even forensic investigation report verified the claim that signature of former Chairman of UPPCL and current secretary of the Ministry of Agriculture in Government of India Sanjay Agrawal did not match his handwriting and the proposal allowing investment from provident fund amount in unsecured firm was a falsely fabricated document which contain his forged signatures.
Meanwhile, the Lucknow Bench of Allahabad High Court had reserved orders on the bail application filed by former MD AP Mishra on 4 March 2020. Justice Dinesh Kumar Singh heard arguments of his team of counsels led by senior Advocate J.N. Mathur and strong opposition by Additional Advocate General Vinod Kumar Shahi on the other. Prosecuting agency contend that the resolution dated 24 March 2017 the meeting of Trust is forged wherein decision to invest as per government’s notification dated 02-03-2015 in the securities with higher security and high interest rates other than deposits of nationalized banks Triple A rated Companies was allegedly taken. Now the sudden change in the investigation agency could add new dimensions to the outcome of the probe in view of its interstate ramifications.
Additional Chief Secretary (Home) Awanish Kumar Awasthi sent a communication to the Government of India on November 2, 2019 requesting to take over investigation of crime registered in Hazratganj police station of Lucknow. The scam attracted grave offences under section 409,420,467 and 471 of IPC (Indian Penal Code), against former Secretary of the PF Trust Praveen Kumar Gupta and then Director Finance Sudhanshu Dwivedi.
Government of India took more than three-month’s time to issue notification on 20th February, 2020 to respond the request and consent of state the for taking over the investigation. It gave long rope to bigwigs to keep away and exonerate from the ambit of sensational investigation by the state agency.
Having received the notification, the anti-corruption branch of the CBI swung into action and registered with CBI on March 5, 2020, entrusting the investigation to Inspector Sabhajeet Chauhan for further investigation. CBI is likely to pray before the trial court in a couple of days for allowing it to investigate the matter a fresh. EOW investigators softly handled senior bureaucrats and ruled out any possibilities of their involvement but now CBI probing the scam could bring much of discomfort to the senior bureaucrats who had run the UPPCL and may be blamed for such a big mismanagement.
The state government had transferred its Chairman Alok Kumar and Managing Director Aparna U with an aim to cool down employees agitation demanding stern action against the top bureaucracy of the power corporation for their alleged complicity. But both of them remained unscratched in the EOW investigation despite the fact that major investments were made in the tainted unsecured firm during their period of posting in the power corporation.
The power corporation had unlawfully invested 4122.70 crores of rupees from General Provident Fund and Contributory Provident Fund Trusts of employees in a Mumbai based private housing finance company, Dewan Housing Finance Corporation Ltd (DHFCL) that has now become defaulter in the share market due to unprecedented liquidity crisis. However, the power corporation realised back 1854.80 crores from DHFCL but it has yet to recover 2267.90 crores from it deposited under fixed deposit scheme. The accused also parked funds in LIC Housing Finance and PNB Housing Finance, taking the total investment to 6,600 crore by UPPCL. Around 65 per cent of the fund money fix deposited in the defaulter company-DHFL.
The major controversy erupted ever since the ED grilled the promoters of DHFCL recently over their alleged links with a front company owned by Iqbal Mirchi, a former aide of Dawood Ibrahim. It promptly led UP government to refer the case to CBI after visualising its wide ramifications. The DHFL came in the eye of the storm after a report suggested that the company, through layers of shell companies, allegedly siphoned off 31,000 crore out of total bank loans of 97,000 crore.
The Enforcement Directorate had carried out raids at eight locations in the month of October,2019 including DHFL’s headquarters in connection with a Rs 2,186 crore loan allegedly given by the NBFC to Sunblink Real Estate, a company which is under probe for its alleged dealing with Iqbal Mirchi, who died in 2013. DHFL owes over 1 lakh crore to multiple financial institutions, including around 40,000 crore to banks. The ED has found misappropriation of funds worth 12,773 crore by DHFL, and another 20,000 crore is untraceable as per a KPMG forensic audit report.
The Economic Offence Wing (EOW) of UP police had arrested 16 persons including former Managing Director A.P. Mishra, Director Finance Sudhanshu Dwivedi and former secretary of the GPF and CPF Trusts Praveen Kumar Gupta and other serving and retired UPPCL officials, stock brokers during the course of investigation. Later EOW team also arrested SMC deputy director Alok Garg and another senior official Mahesh Gupta after establishing their alleged complicity in transferring of around 65 crores commission amount purportedly given in lieu of huge investments through web of shell companies.
EOW team investigated and filed charge-sheets against 16 accused persons on the charges of criminal breach of trust, cheating, forgery of valuable security, using forged document as genuine, unlawfully and fraudulently investing employees’ hard-earned contribution money amounting to rupees 4122.70 crores from their GPF and CPF Trusts in an unsecured private housing company, the DHFL since March 24, 2017. Thus, UPPCL faced extreme hardship as 2267.90 crores turned practically unrecoverable. Bombay High Court had barred the DHFL from making fresh repayments because of a different money-laundering probe by the ED. EOW discovered 28 brokerage or bogus firms allegedly in connivance with the officials managing the two UPPCL PF trusts for realising heavy commissions for investments. EOW had arrested chartered accounts (CA) and the owners of brokerage or bogus investment firms including the kin of former secretary of the trust in this connection.