DHFL used software to hide fraud: Probe

Bankrupt housing finance company Dewan Housing Finance Corporation (DHFL) had used different loan accounting software to hide fraudulent transactions from fictitious borrowers, said the forensic report by Grant Thornton. It said the software helped the company hide the transactions from regulators and auditors and show inflated income to the stock exchanges. The report said the company used Foxpro software to prepare codes.

Bankrupt housing finance company Dewan Housing Finance Corporation (DHFL) used different loan accounting software to hide fraudulent transactions involving fictitious borrowers, said the forensic report prepared by Grant Thornton.

It said the software helped the company hide the transactions from regulators and auditors and show inflated income to the stock exchanges.

The report said the company used Foxpro software to prepare codes for concealing actual disbursements and collection of funds by creating 260,315 fictitious home loan accounts. These codes then had three components, including disbursement distribution, and were used to make the actual disbursements to fictitious entities, which included several home loan accounts of smaller amounts. These fictitious home loans accounts were randomly picked up from DHFL’S own database of closed loan accounts.

Then collection distribution code was used to show funds flow from Bandra Book Entities (Grant Thornton’s name for fictitious companies) to numerous other fictitious accounts. The funds were wrongly shown as payment of principal amount from fictitious home loan borrowers. These were adjusted as principal loan repayments instead of payment of interest component first. Therefore, the “Bandra Book Entities” portfolio was gradually brought down by showing repayments of principal and not the interest amount.