EOW summons HDIL’s chief Wadhawan over ‘loan misappropriation’

MUMBAI: Sarang Wadhawan, vice-chairman and managing director (MD), Housing Development and Infrastructure (HDIL), was summoned on Tuesday by the Mumbai Police to join a preliminary enquiry (PE) into alleged loan misappropriation and unauthorised sale of units, sources in the know told ET. The summon notices were issued earlier this month after the Economic Offences Wing (EOW) of the Mumbai Police began the probe that follows two recent complaints.
In August, a complaint was filed by a director of Mack Star Marketing, a joint venture between Ocean Deity Investment Holdings — an offshore entity — and HDIL Group. The director concerned represents Ocean Deity. Previously, similar allegations were made in a complaint by Ocean Deity.

The development takes place at a point when Wadhawan’s group HDIL has come under the media glare following the collapse of PMC Bank, one of the largest urban co-operative banks in India. The curbs imposed by RBI on PMC come less than a month after PMC had lent close to Rs 100 crore to HDIL for repaying loans to BoI.

The transaction has raised the question that why PMC took fresh exposure to HDIL when it was evident that the realty company was being dragged to the bankruptcy court. “It was probably with the hope that proceedings under the bankruptcy code would be withdrawn,” said a senior banker.

It’s learnt that the city police, which is investigating HDIL Group in at least two other cases pertaining to alleged fraud on homebuyers and Maharashtra Housing and Area Development Authority (MHADA) — the state authority to provide affordable housing — has opened a ‘look-out circular (LoC)’ against Wadhawan. “It’s a precautionary measure taken to ensure that Wadhawan does not leave the country pending investigation,” said an official requesting anonymity.

The city police also plans to write to Yes Bank to seek details on the loans sanctioned and also quiz bank officials over the allegations of ever-greening — a banking parlance on regularising bad loans through new disbursements. An erstwhile arm of DE Shaw, Ocean Deity Investment owns 78.09% in the Indian JV with HDIL Group.

According to the PE, the complainant has alleged that the majority shareholder was not informed of loans of over Rs 135 crore disbursed by Yes Bank to the JV entity. These loans were then allegedly transferred to bank accounts of other HDIL Group companies, almost simultaneously, to repay loans taken by them from Yes Bank.


SALE OF OFFICE UNITS
The complainant has also claimed that part of the proceeds received from the sale of some of office units at the Mack Star-owned commercial building Kaledonia in Andheri (Mumbai) was “diverted to HDIL at the behest of HDIL promoters”. Some of the sale proceeds received by Mack Star were diverted from the company’s bank accounts. Some units, according to the complaint, were allegedly sold at “undervalued prices” to “entities related to the HDIL promoters.”

Emails and messages sent to Wadhawan remained unanswered till the time of going to the press. Wadhawan, however, in an earlier story on the subject published by ET had said, “..Mack Star Marketing had purchased development rights of HDIL through certain investments by DE Shaw Composite Investments (Mauritius) and the transaction was limited to such sale of development rights with HDIL.

All transactions related to Mack Star Marketing were conducted by the company itself and HDIL had no relation in any borrowings or debt raised by Mack Star. Mack Star’s relationship with its lenders was conducted by its owner DE.Shaw Composite.”

Sarang Wadhawan, who could not be contacted on Wednesday, did not respond to text messages from ET till the time of going to Press. A Yes Bank spokesperson, in an email to ET, said, “We would like to clarify that the bank has not received any communication from the Mumbai Police.”