Amrapali diverted Rs 3,000 crore of homebuyers’ money

After the Supreme Court threatened to send him behind bars for not “coming out clean” on siphoning off homebuyers’ money, Amrapali group CMD admitted diversion of Rs 2,996 crore to other companies for expanding the business, which resulted in financial crunch for completing housing projects. The real estate giant, which is involved in construction of various housing projects, including 170 towers in Noida and Greater Noida in which 46,000 buyers had invested, said the figure of Rs 2,996 crore diversion is up to March 2015 as thereafter the balance sheets of the companies were not updated. The group said its 15 companies received Rs 11,573 crore from homebuyers and it raised an additional Rs 4,040 crore from financial institutions and foreign direct investment. Referring to the balance-sheet till 2015 and raw data available, the group claimed to have invested Rs 10,300 crore in those housing projects. In a comprehensive affidavit, Amrapali CMD Anil Sharma placed before the court all monetary transactions of 46 group companies and said Rs 5,980 cr was spent for creating other properties like malls, resorts, making payments for land, office administration and refund to banks and homebuyers. Sharma said the group overspent Rs 667 crore beyond the money raised and that amount is yet to be paid to contractors. He gave a list of Amrapali’s nine housing companies from where homebuyers’ money was diverted. With SC-appointed forensic auditors alleging that the group has created a web of more than 200 companies for siphoning off homebuyers’ money, Sharma refused the allegation and said there are 46 companies within the group and no money was diverted to any company outside the group. The apex court had ordered forensic audit to track diversion of funds and said such diversion of homebuyers’ money for any other purpose amounted to criminal misappropriation for which the companies should be prosecuted. The auditors — Ravi Bhatia and Pawan Kumar Aggarwal— had said the Amrapali group spent homebuyers’ money partly for construction of housing projects while the rest was diverted to shell companies created by the group, and its promoters. They said crores of rupees were given to firms controlled by relatives of Amrapali’s statutory auditor and chief financial officer who were also involved in the bungling. They said Rs 600 crore out of Rs 1,040 crore collected from homebuyers in one of the housing projects was diverted for other purposes. Responding to the findings of forensic auditors, the group said money was not transferred to any company outside the group and justified the diversion of funds within the group to expand its business. The affidavit said some companies were given loan by the group and almost all the amount had been refunded. “Transfer of funds from one Amrapali group of companies and going to another company of the group is well within the the knowledge of Board of Directors, CFO and statutory auditor as the same is done upon professional advice and suggestions made by them in the business interest as the same is done under the bona fide belief and advice received that the money so transferred is going back to another company for utilisation for business activity and the money so transferred is used for the expansion of business activities,” Sharma said in his affidavit. The affidavit was filed in compliance of the apex court’s order granting the group one last opportunity to disclose all financial transactions.