Media Has Its Own Vijay Mallya – Deccan Chronicle Debt Fraud Case

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DC Head T. Venkattram Reddy arrested by CBI last year. Image Credit : HT

While the crackdown over wilful loan defaulters is going on, how the media organisations can be avoided to become a discussion point? 

Of course media organisations have also been infected by the syndrome of corruptions, money laundering and indebtedness which has caused the crisis to the country’s banks and economy. In recent past, we have witness the bankruptcy of several news organisations, which led to their shut down and transferring the stake to other corporate group. The headlines of Saradha chit funds scam where media channels & newspapers brought up over Ponzi schemes have not gone so back.  

One can summarise the long list of banks and lenders including the premier ones who loaned DCHL – Canara Banks (Rs 1230 Cr), ICICI Bank, Kolkata based Srei Infrastructure and Finance Limited (Rs 220 Cr), Andhra Bank (Rs 380 Cr), Kotak Mahindra Bank, Yes Bank and IDBI Bank.

Yes, Media has its own Vijay Mallya. The Deccan Chronicle Holdings Ltd (DCHL) which publishes popular English dailies Deccan Chronicle with the circulation over one million and the Asian Age and the Telugu daily Andhra Bhoomi, did the same. Currently, the DHCL is on verge of change in the ownership after it failed to meet the commitment to repay over 15 banks and other lenders whose total debt stands at around Rs 5,200 crore.

The Deccan chronicle, a 75 old news organisation was started as a weekly, by poet Sarojini Naidu's son, M N Jaisoorya along with three others. Later due to debt crisis, it was sold to T. Chandrashekar Reddy. Later in 70s, he went on to become a congress MP and gave managing control over DCHL to his sons T. Venkattram Reddy and T. Vinayak Ravi Reddy. But present Chairman T. Venkattram Reddy has set to leave out the ownership of DHCL and news business as he has failed to repay the loan taken from more than 15 banks and other lenders. This is one another fallout after T. Venkattram Reddy shut down his other business like IPL franchise, Deccan Chargers and aviation venture Deccan Aviation (Air Deccan).

The only difference is here, media baron T. Venkattram Reddy went not as lucky as liquor baron Vijay Mallaya did to escape. As the loop of crackdown was started to tighten early on time, in Feb 2015, CBI arrested honcho Reddy and his brother vice-chairman and managing director T. Vinayak Ravi Reddy, vice chairman P.K. Iyer as well as the company's auditors C.B. Mouli & Associates under the serious charges of fraud and forgery. The FIR accused him of taking corporate loans summing up approx. Rs 1230 crore by allegedly submitting false and fabricated financial statements and by suppressing the borrowings taken from other banks. Though he is on bail and matter under is still subjudice, he could not be restrained to penalize.

It all started in 2005, when Reddys’ desperation to rampant business expansion took birth and they started to pile up the small packet of corporate loans worth 20-25 crore from various banks. They showed the adequate drawing power of company by fabrication of financial statements and forgery of the key documents related to assets holding for mortgages but same time DCHL hided the borrowings from other banks. During this span, the company kept on to earn huge profit and even bought IPL franchisee of Hyderabad in 2008 – Deccan Chronicle for 107 million dollars. Soon the debt shoot-up the thousand crore limits. DCHL had availed open cash credit limit with periodical enhancements and multiple short-term corporate loans aggregating to about Rs 1,230 crore from Canara Bank alone. The loans which had been sanctioned, was utilised to fraudulently divert the funds other than the purpose. Though the loans were out of paying capacity of DCHL, it submitted as well as presented the forged balance sheet summarising the actual borrowings from Canara bank and other lenders.

The curtains were rolled-up to uncover the illegality of DCHL when, in 2012, the Industrial Finance Corporation of India (IFCI) filed a petition in the Andhra Pradesh High Court seeking the liquidation of Deccan Chronicle. Further, Karvy Stock Broking Limited, Hyderabad filed the police complaint accusing the DCHL promoters of forgery as the promoters had pledged the same stake and assets to two lenders. Later in August 2012, it was revealed that company owed to 28 banks and other lenders. Six directors resign from the newspaper's board as the Reddy's bankruptcy starts coming in open, making it the worst year and marking the downfall of the newspaper. In 2013, CBI registered a case of cheating, fraud and criminal conspiracy against Deccan Chronicle Holdings chairman Reddy brothers, and vice chairman P.K. Iyer. The FIR accuses DHCL of taking corporate loans totalling Rs 1230 crore by allegedly submitting false and fabricated financial statements and by suppressing the borrowings taken from other banks and it was evident of DC promoters had "deliberately hatched a conspiracy" to cheat Canara Bank to the tune of Rs 1,230 crores. A probe launched by the Serious Frauds Investigation Office in the Ministry of Corporate Affairs too found in December 2014 that the DC management was guilty. Later, other banks and lenders also joined the legal contesting against DCHL.

One can summarise the long list of banks and lenders including the premier ones who loaned DCHL – Canara Banks (Rs 1230 Cr), ICICI Bank, Kolkata based Srei Infrastructure and Finance Limited (Rs 220 Cr), Andhra Bank (Rs 380 Cr), Kotak Mahindra Bank, Yes Bank and IDBI Bank.

After court & RBI intervention, DC lenders were agreed to come together and resolve and restructure the stakes position and ownership. Now, SIFL which had acquired around 24% equity shares in the DCHL against its borrowings of around Rs 220 crore September 2015, emerged out the leader in race and is permitted by the Hyderabad High Court to hold a meeting of DC group’s lenders and stakeholders in Hyderabad to put in place a new management. In all likelihood, another Kolkata based financial expert and former chairman of Network 18 Media, Manoj Mohanka is to become as the new chairman of the DC group.

But when the big defaulter Vijay Mallya is fiercely being debated in the media, the poor farmers are committing suicide due to not repayment of small sum of loans, whole chapter of this financial fraud by a media group like Deccan Chronicle’s name is even not worth to be counted among wilful defaulters or bad debts at all, lest this leaves the real common man of the country in thoughts that media must look at its backyards too. All the sins are to found out there!   

Jan-Satyagrah Desk
Jan-Satyagrah Desk represents the collective work of its editorial team by researching, observing and writing on various contemporary subjects.
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