DHFL fraud: The Wadhawan brothers, a multi-crore scam and ongoing cases

In July 2022, the Wadhawan brothers – Kapil and Dheeraj, who were former Dewan Housing Finance Limited or DHFL promoters, were arrested for allegedly defrauding 17 banks in a multi-crore scam. DHFL banking fraud has been tagged as the country’s biggest scam in the banking industry after ABG Shipyard’s fraud case of Rs 20,000 crore which was reported earlier this year.  

The Yes Bank-DHFL case started on March 8, 2020, when the CBI booked Rana Kapoor, the founder of Yes Bank, and Kapil Wadhawan, former CMD of DHFL, on charges of criminal conspiracy and cheating under the Prevention of Money Laundering Act, 2002.   

Case details and family members 

DHFL’s troubles started in January 2019 following a sting operation by Cobrapost that alleged that the company had siphoned off money to related entities.  

Following this, credit rating agencies started downgrading its paper in June 2019. DHFL started defaulting on its repayments in July 2019. 

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. 

In July 2022, the CBI booked former promoters of DHFL, Kapil Wadhawan and Dheeraj Wadhawan, among 13 others in connection with the case after a complaint was filed by the Union Bank of India (UBI).  

UBI, which is the leader of a 17-member lender consortium, claimed that it extended credit facilities to DHFL to the tune of Rs 42,871 crore between 2010 and 2018. 

The consortium said of the total amount, Rs 34,615 crore is still outstanding. The loan was declared NPA in 2019 and fraud in 2020. 

According to the CBI FIR, the scam started taking shape between April and June 2018 when Yes Bank invested Rs 3,700 crore in short-term debentures of DHFL.

The Wadhawan brothers were arrested in July 2022 and charged under Sections 120-B (criminal conspiracy to commit an offence), 409 (criminal breach of trust by a public servant, or by banker, merchant or agent), 420 (cheating and dishonestly inducing delivery of property), 477A (Falsification of accounts) of the Indian Penal Code and Sections 13 (1) and (2) (Criminal misconduct by a public servant) of the Prevention of Corruption Act. 

More scams in the family 

In 2010, the Wadhawans or RKW family split their business by mutual agreement to create Housing and Development Infrastructure Limited (HDIL), and Dewan Housing Finance Limited (DHFL).  

But both firms were charged in separate scams in 2019. 

HDIL, which is undergoing the Corporate Insolvency Resolution Process (CIRP), was led by Rakesh Kumar Wadhawan. In January this year, the CBI booked HDIL promoters Rakesh Wadhawan and Sarang Wadhawan in a new bank fraud case involving an amount of Rs 140 crore about their subsidiary Guruashish Construction. 

The fresh action was initiated on a complaint from the Union Bank of India against the businessmen who are embroiled in a Rs-4,300 crore Punjab and Maharashtra Cooperative (PMC) Bank scam case, they said. 

The bank alleged that Guruashish Construction was a wholly owned subsidiary of HDIL engaged in the real estate business in Mumbai. They are also being probed by the Enforcement Directorate (ED) as part of another Prevention of Money Laundering Act case related to an alleged loan fraud at the PMC Bank involving an amount of more than Rs 4,300 crore. 

Flashy lifestyle 

A report in the Economic Times report noted that the arrested brothers -- Kapil and Dheeraj -- managed to sign an agreement for the sale of two exclusive paintings held by a firm linked to them.  

The CBI said they conducted raids on the premises of Delhi-based businessman Ramesh Nawandar and found luxury watches and two paintings worth Rs 33 crore, allegedly owned by the Wadhawan brothers. 

Hospital and jail stay 

In 2022, India Today first reported that after his arrest Dheeraj Wadhawan in connection with the Yes Bank money laundering case, had spent more time in a luxury hospital than behind bars. 

For the rest of time, Dheeraj divided his time between hospitals. These stays included a 10-month stint at Mumbai’s plush Kokilaben Dhirubhai Ambani Hospital. 

On March 29, India Today reported that Kapil Wadhawan reportedly left the Taloja prison in Mumbai to KEM Hospital on August 7 on the pretext of medical examinations, but visited the hospital parking lot to meet his family and business associates.  

On August 9, Dheeraj Wadhawan too followed a similar pattern and left Taloja prison for JJ Hospital.  

The India Today report said Wadhawans were seen enjoying meals, and beverages and engaging in conversations, using laptops, and mobile phones, and were seen signing documents. 

Recently, Dheeraj Wadhawan was denied medical bail by a special court which observed he had not paid Rs 24 lakh for police escort provided to him during his long hospitalisation.

In his plea, Wadhwan sought medical bail on the grounds that he has serious heart-related medical issues, citing he had suffered a massive heart attack at the age of 38 in January, 2018, which required emergency angioplasty in Switzerland.

Before their arrest in 2020, the Wadhawans reportedly managed to evade the Covid lockdown in Maharashtra with the help of a senior IPS officer. 

The Wadhawan family and their friends travelled to their farmhouse in Mahabaleshwar from Khandala in their cars, when both Pune and Satara districts were reportedly under lockdown restrictions for containing Covid-19.