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Builders, Banks, Babus and Dhoni: Amrapali Debacle Raises Questions About Each Stakeholder

It is as though the entire system conspired against the aam aadmi to siphon off their life savings without providing the proverbial roof over the head.

Sindhu Bhattacharya |

Updated:July 26, 2019, 2:03 PM IST
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Builders, Banks, Babus and Dhoni: Amrapali Debacle Raises Questions About Each Stakeholder
Amrapali allegedly diverted money to Amrapali Mahi Developers and Rhiti Sports Management, where MS Dhoni’s wife Sakshi is a director.
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As the saga of deceit by the Amrapali group unfolds, homebuyers have come to realise that not just the builder, they may have been short-changed by every other stakeholder in the business too. It is as though the entire system conspired against the aam aadmi to siphon off their life savings without providing the proverbial roof over the head.

There seem to be multiple villains in this sorry tale, beginning with the promoters and directors of the builder group. According to a forensic audit, done on the directions of and accepted by the Supreme Court, directors of the Amrapali group allegedly spent homebuyers’ funds on the wedding of the daughter of a director, foreign travels, expensive watches, jewellery and on the purchase of luxury cars. Homebuyers’ funds were also allegedly used for investment in mutual funds, creating personal properties, payment of housing loans, investment in shares and securities.

Not just Amrapali officials, those in the Noida and Greater Noida authorities, who allegedly leased the land needed to build houses but did not conduct any checks thereafter, are also part of the saga. As are officials of foreign brokerage JP Morgan, who financed housing projects but then allegedly took out their money through dubious means from these projects, violating Indian laws.

Bank officials who sanctioned large loans to the builder but allegedly did not conduct checks on where the money meant for houses was being used come in next. Last but not the least, cricket legend MS Dhoni, who started his association with the Amrapali group as a brand ambassador and whose wife is allegedly associated with a group company of the builder. The Dhonis have denied all allegations though.

The Supreme Court has now come to the rescue of scores of these hapless homebuyers, by asking state-owned National Buildings Construction Corporation (NBCC) to take over stalled projects of the Amrapali Group and cancelling its licence. A division bench headed by Justice Arun Mishra has appointed a court receiver, who will have rights to Amrapali’s properties and recover its dues. Several other actions have also been ordered by the apex court against the builder and its officials.

A forensic audit mandated by the apex court details the extent to which Amrapali and other stakeholders went in the saga to dupe homebuyers.

Builder

The auditors have said that Amrapali promoters created a web of more than 150 companies for routing the funds and creating assets. About 100 companies were under the supervision and control of promoters and used mainly for the purpose of diversion of funds. The directors and shareholders of these companies were ‘benami’ and were the trusted junior employees of promoters, CFO and statutory auditors.

The group proposed to construct around 42,000 flats in Noida and Greater Noida at the beginning of this decade and solicited bookings from homebuyers, with a timeline of 36 months. It is 2019 and homebuyers are yet to get possession of their flats. During various previous court hearings, the promoters of the Amrapali Group have admitted that Rs 2,765 crore of collections from homebuyers, from six housing projects was diverted to other projects.

Banks

The forensic auditors have noted that the whole process of transfer of funds from one company to another company, then to a third company and so on and so forth on the same dates would not have been possible without active support by the bankers.

“The Bankers, in our opinion, turned a Blind Eye to the various transfer of funds from one account to another for reasons best known to them. They didn’t inquire the huge transfer of funds from various accounts which were being routed every day. Had they been slightly more vigilant to monitor and control transfer of funds, the management would have not dared to launder the money from one company to another according to their whims and fancies and the bankers are solely responsible for the negligence on their part”.

The auditors pointed to Bank of Maharashtra, Andhra Bank and other lenders. The banks acted as mute spectators to unapproved diversion, which was almost happening evidently in all banking transactions.

Violation of FDI Norms

Amrapali received Rs 140 crore during 2012-13 from IPFFI Singapore PTE Limited, under the Foreign Direct Investment (FDI) Scheme. As per FEMA rules this amount was to be invested in real estate construction projects only, the forensic auditors noted that ASCPL did not use money for the project for which it was received from IPFII Singapore but transferred Rs 85 crore to Amrapali Centurian Park Pvt. Ltd. and Rs 55 crore to repay bank loan instalments and repay the outstanding creditors provided for in the books and standing in the books.

“The said payments made by ASCPL are, therefore, in contravention of FDI norms and rules and for which the money was brought in India. Moreover, ASCPL has paid interest of Rs.58.81 crore @ 17% (which is a highly abnormal rate) so far to IPFII, Singapore during the last three years.”

Dhonis

The forensic auditors have alleged that Amrapali diverted money to Amrapali Mahi Developers Private Limited and Rhiti Sports Management Private Limited, where Dhoni’s wife Sakshi is a director. The audit report said Amrapali Sapphire Developers Private Limited paid Rs 6.52 crore, out of the total amount of Rs 42.22 crore paid from the Amrapali group of companies to Rhiti Sports Management Private Limited during 2009 - 2015.

“This sum has been paid on account of agreements executed by Shri Anil Kumar Sharma, CMD for and on behalf of Amrapali Group of Companies with Rhiti Sports Management Private Limited. There is no resolution on record authorising Mr. Anil Kumar Sharma, CMD to enter into an agreement on behalf of all Amrapali group of companies.”

Elsewhere, the auditors have said, referring to multiple agreements between the two parties, that “these agreements have just been made for payment of amounts to Rhiti Sports Management Private Limited company are sham agreements and made just for making payments to Rhiti Sports Management Private Limited. We feel that homebuyers money has been diverted illegally and wrongly to Rhiti Sports Management Private Limited and should be recovered from them as the said agreement in our opinion do not stand the test of law.”

(Author is a senior journalist. Views are personal)

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| Edited by: Nitya Thirumalai
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