Forensic audit of Unitech Ltd, which was done on the orders of India’s Supreme Court, revealed massive diversion of funds by the company and its directors with the report saying that money invested by home-buyers and banks were used for purposes other than constructing houses and some of the amount was diverted to off-shore tax havens, reports Economic Times.
Around Rs 14,270 crore was deposited by 29,800 home-buyers and Unitech took loan of Rs 1,805.86 crore from six financial institutions for construction of 74 housing projects.
After examining the account books of Unitech Group and its subsidiaries, the auditor said Rs 5,063 crore or 40 epr ecnt of the collections from home-buyers were not used for the housing projects while outflows of Rs 2,389 crore were still to be ascertained.
The report said that nearly 40 per cent of the money raised from financial institutions amounting to Rs 763 crore had not been utilised for construction.
The auditor filed the report after examining 51 projects and the rest 23 projects have not yet been analysed as the company failed to provide relevant data.
A bench of Justices DY Chandrachud and MR Shah, which directed forensic audit of the Group, incorporated the audit findings in its order.
Giving details of potential diversion of funds, the audit report said that high value investments were made in off-shore tax-havens, which were later written off.
‘Between 2007-2010, three subsidiaries of Unitech made investments of Rs 1,745.81 crore in ten companies in Cyprus. Between 2016- 2018, an amount of Rs 1,406.33 crore or 80 per cent of the total investment value was written off while the remaining amount of Rs 339 crore is appearing as equity investments in the books of accounts,’ the report said.
‘Similarly, in 2007-2008, Unitech Global Limited, a company registered in Jersey and a subsidiary of Nuwell Limited, another subsidiary, advanced a loan of Rs 294.47 crore to Kortel Limited, another step-down subsidiary of Unitech. Kortel made investments of Rs 292.99 crore in three foreign entities based in Cyprus during 2015-2016. Rs 294.47 crore (100 per cent of total investment value) was written off in the books of Kortel,’ it said.
The forensic auditors have pointed out that between 2009-2011, Unitech sold five wholly owned subsidiaries to three undisclosed related parties at an amount of Rs 493.72 crore for which a balance of Rs 294.30 crore is receivable.
‘During March 2011 to October 2013, Unitech advanced Rs 237.63 crore to a related party, Millennium Construction Private Limited, for acquisition of shares of a company by the name of Grandeur Buildwell Private Limited. No shares of the company were allotted to Unitech and the entire advances are still receivable,’ it said.
The report said that diversion of funds was also done through transactions with undisclosed related parties.
It said that in 2011-2012, Unitech and two subsidiaries entered into transactions with Arkhion Design Private limited for availing of architectural services of a value of Rs 108.92 crore but it was Unitech employees who were involved in the management of operations of the said company.
It also said that a subsidiary of Unitech made payments of Rs 224 crore, including to entities based in Abu Dhabi/Dubai.
Unitech had in 2018 written off receivable balances of Rs 198 crore pertaining to 26 parties involved in transactions relating to the sale of steel or purchase of scrap with the group, it said.
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