All you want to know about CBI probe into Dewan Housing and Biocon

Two cases, two companies, one agency. Yes. The Central Bureau of Investigation (CBI) booked executives of two prominent companies—Dewan Housing Finance Corp Ltd (DHFL) and Biocon—for fraud and malpractice.

Dewan Housing

The DHFL case, in which promoters Kapil Wadhawan and Dheeraj Wadhawan have been booked, is mammoth. The CBI has alleged that the Wadhawan brothers cheated a consortium of 17 banks led by the Union Bank of India to the tune of Rs 34,615 crore, making it the biggest banking fraud probed by the agency.

The CBI also carried out searches at 12 locations across Mumbai, at the premises of accused in the fraud case.

Who first approached the CBI in the case?

News reports say the agency acted on a complaint from the bank on February 11, 2022.

Why is the latest case significant?

It is significant for its size. The alleged bank fraud case has surpassed fraud amount of Rs 23,000 crore by ABG Shipyard.

But aren’t the Wadhawans already under the CBI’s scanner?

Yes. The Wadhawans are already under CBI probe in connection with alleged corruption involving Yes Bank founder Rana Kapoor. The agency alleged that Kapoor entered into a criminal conspiracy with Wadhawan for extending financial assistance to DHFL through Yes Bank in return for substantial undue benefits to himself and his family members through companies held by them.

Last year, Piramal Capital and Housing Finance had completed the acquisition of DHFL for Rs 34,250 crore.

Biocon

In what could be extremely embarrassing for India’s most well-known woman entrepreneur Kiran Majumdar-Shaw, the CBI has alleged that senior officials of the Central Drugs Standards Control Organisation (CDSCO) colluded with Biocon Biologics to waive the phase-3 clinical trial of the Insulin Aspart injection, and “manipulated” the minutes of the subject expert committee (SEC) meeting causing “substantial wrongful gain” to the company.

What has the CBI done in the case so far?

The agency arrested Joint Drugs Controller Eswara Reddy on Tuesday along with L Praveen Kumar, associate vice-president and head of national regulatory affairs at Biocon Biologics.

Guljit Sethi (alias Guljit Chaudhary) of Bioinnovat Research Services, and Dinesh Dua, director of Synergy Network – both of whom allegedly acted as “conduits” on behalf of pharma companies – were arrested along with Animesh Kumar, assistant drug inspector at CDSCO. The agency has sought police custody for all accused.

What has the CBI alleged?

The CBI has alleged that Sethi, who has been handling government regulatory work for Biocon Biologics, conspired with Praveen Kumar and other senior executives to pay Rs 9 lakh as a bribe to Reddy. The money was allegedly offered in lieu of a favourable recommendation on the Insulin Aspart injection at an SEC meeting on May 18 for waiving phase-3 clinical trials, the agency said.

In its FIR, the CBI has said Reddy had attended the SEC meeting on May 18, and had also supported the waiver.

Not only that, the agency said Reddy allegedly “manipulated” the minutes of the SEC meeting held that day by changing some key words like replacing “data” with “protocol”, thereby giving “substantial wrongful gain” to the company.

In fact, Sethi was acting on behalf of several pharmaceutical companies and was allegedly delivering bribes to various senior CDSCO officials through Dua on various occasions, the CBI said.

In the case of Biocon, Sethi conspired with Kumar and other CDSCO officials to include the Biocon Biologics file for the SEC meeting held on June 15, and Kumar received a bribe of Rs 30,000 for this, the CBI FIR noted.

It added that Reddy met Dua in the CDSCO office on June 15 in connection with the approval of the third file. The CBI said Reddy assured Dua of a favourable outcome. Later in the day, Kumar allegedly informed Sethi that the file had been approved in the SEC meeting.

The CBI’s FIR states that Reddy shared his residential address in New Delhi with Dua. Kumar allegedly agreed to pay Rs 9 lakh to Reddy, and Sethi arranged for a part of the bribe to be delivered to Reddy at his residence on June 20, the CBI said.

The CBI said these acts prima facie disclose criminal conspiracy, cheating, and forgery and thus a case has been registered against them.

What has Biocon said in response?

In a statement, Biocon Biologics said, “We strongly deny the allegations of bribery against the company and its officials associated with the approval process of one of our products in India.”

How did the stock market react to the news?

The Biocon counter closed 3% down as compared to the previous day’s close, and the stock could be under pressure in the coming days.