Housing dreams of thousands of Amrapali Realty's customers disappeared down a rabbit hole after court-appointed auditors revealed that the firm funnelled over Rs 700 crore, meant for residential projects, to shell companies, allegedly to launder it.
The findings were presented to the Supreme Court by forensic auditors Ravi Bhatia and Pawan Kumar Aggarwal, who cited three instances of funds being diverted to front companies. They also told the bench of Justices Arun Mishra and UU Lalit that one of the firm's directors, Vivek Mittal, is the relative of Amrapali Group's statutory auditor, Anil Ajay & Company, and this could have been why the statutory auditors never reported the diversion.
In the first instance of illegality, group directors diverted Rs 125 crore to GauriSuta Infrastructures Private Limited, a shell company with a net worth of Rs 76,000, the audit team said.
Another instance related to one of the company's Greater Noida housing projects, Leisure Valley. Of a total of Rs 1,040 crore gleaned from homebuyers, Rs 400 crore was spent on construction while the remaining Rs 600 crore was diverted to other companies, details of which are still being gathered, the auditors said.
A third instance involved an advance payment of Rs 4 crore, made in 2010, by the Amrapali Group to a party for scouting land for the company.
To hush up these irregularities, Amrapali Group allotted flats to its statutory auditors and their relatives for nil or insufficient consideration, the court-designated auditors said.
"Everybody was sleeping. Even the bankers were sleeping. A blind man also would not sign on the agreement approved by the auditors for these projects," the forensic auditors told the top court.
Citing an unfruitful interaction they had with the group's chief financial officer, Chander Wadhwa, the audit duo said the CFO failed to recall basic things such as the date he joined the company and number of years spent as CFO. "He seems to have lost memory partly," the auditing team told the court, although he did recall the day he was married, and other such personal information.
Amused by the CFO's conduct, the bench has ordered Wadhwa to appear in court on Friday at 2 pm, so the auditors may quiz him. The auditing team was also directed to prepare an interim status report and document their findings by Thursday.
A copy of the report will be shared with Amrapali Group and the statutory auditors, so they can respond on Friday. "This is fraud on a large scale. The statutory auditors are hand-in-glove with the company as their relatives are being given money. The way the Group Directors are acting— by suppressing many things and hoodwinking everyone — is highly unfair," the court said.