The Central Bureau of Investigation(CBI) on Thursday filed an FIR against officials of Chennai based United India Insurance Company(UIIC), Deccan Chronicle Holdings Ltd(DCHL), its Chairman T Venkatram Reddy, CARE rating and IDFC for allegedly defrauding the United India Insurance(UIIC)of Rs 30.54 crore.
CBI has named CFO of IDFC – Sunil Kakkar and CEO of CARE – Rajesh Mokashi in its FIR.
CBI has alleged that A Balasubramanian (former Deputy General Manager of UIIC’s investment department,) and K L Kunjilwar (ex-chief manager),made suspicious investments through the privately placed short term unsecured redeemable non-convertible debentures issued by DCHL in 2011 in violation of the regulations,instructions and procedures.
CBI says that the same was not repaid by DCHL, causing a loss of Rs 30,54,25,350 to the UII.
The investments were made on three different occasions by deliberately by-passing the investment committee of UIIC.
These investments were based on the rating made by SEBI approved rating agency M/s CARE.
“This, UIIC invested Rs 30 crores in DCHL and it relied on the rating of CARE. It had not done any separate risk analysis/due diligence apart from CARE Rating PR1+. It has not obtained any appraisal report from any financial institution. The entire debenture issue was made under private placements through the sole arranger M/s IDFC Limited,” said CBI.
Between July and October 2011, CBI says, three office notes were put up by Kunjilwar for investment of Rs 10 crore each in 11.25% unsecured non-convertible debentures issued by DCHL for purchase of short term unsecured debentures with 364 days maturity without analyzing the proposal in detail, and the same was approved by Balasubramanian.
“At the time of investment in 2011, the rating awarded by CARE was PR1+ and at the time of redemption in 2012, it was drastically downgraded to D,” adds CBI.
CBI further says that on the date of maturity, the principal amount with interest was not repaid by DCHL. DCHL had issued three cheques of Rs 10 crore each, which were dishonoured when presented for encashment.
“On the date of maturity i.e in the year 2012, the principal amount with interest was not repaid by M/s DCHL. M/s DCHL had issued three cheques of Rs 10 Crores each. When the above cheques were presented through encashment, they were dishonoured. M/s UIIC had lodged a complaint against the company u/s 138 of Negotiable Instruments Act which is pending before the Jurisdictional Court,'' said CBI in its FIR. .
About DCHL, CBI says the borrowing powers of the company was increased from Rs 700 crore to Rs 1,000 crore in the annual general meeting of the company in September 2007 and from Rs 1,000 crore to Rs 5,000 crore in next AGM in February 2013. “It is revealed that as on date of the issue of debentures, the company’s total borrowings were Rs 3,755.70 crore,” said CBI.
UIIC was investing the premium collected from the policyholders 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 prescribed by its board based on the rules and regulations of Insurance Regulatory and Development Authority of India (IRDA).