Scam artists draw a loophole through artwork

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Investing in expensive artwork and valuables appears to have become the preferred option for businessmen looking to divert proceeds from bank loan scams, the latest example being the 34,615 crore case ₹ against Dewan Housing Finance Corporation Limited (DHFL) and its promoters.

The Central Bureau of Investigation (CBI) found that the two main defendants in the case – then DHFL Chief Executive Officer Kapil Wadhawan and Director Dheeraj Wadhawan – bought at least two paintings worth almost 30 crore ₹. They were seized on the 15 e floor of co-defendant Ajay Ramesh Nawandar’s property at Andheri West in Mumbai on July 9.

Subsequently, the CBI arrested Mr. Nawandar on the grounds that he was trying with others to get rid of paintings and other luxury items at the behest of the Wadhawan brothers. He is currently in custody. His request for bail was rejected by a special court on August 20.

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It turns out that during the searches, the agency seized the two paintings except for ₹45 lakh in cash and 25 expensive watches from Mr. Nawandar’s premises. An investigation revealed that the paintings were purchased through an entity named JVPD One Builder from Asta Guru Auction House Private Limited in 2013, according to the agency.

The agency alleges that the paintings were acquired through the proceeds of fraudulent loans taken from a consortium of 17 banks led by the Union Bank of India. Additionally, funds from this purchase had been diverted by DHL to JVPD through companies operated by DHL named Creatoz Builders Private Limited and RKW Developers Private Limited.

The CBI argued in court that since proceedings to seize Mr. Kapil Wadhawan’s assets were ongoing, Mr. Nawandar kept them. [paintings, watches, etc.,] in order to prevent them from being attached and was trying to get rid of the items. The agency, while investigating his biggest ever bank fraud case, also uncovered evidence that he received ₹1.30 crore from Mr. Dheeraj Wadhawan.

Another prominent case in which investigative agencies had seized paintings and luxury items was that against fugitive Nirav Modi, his uncle Mehul Choksi and others. The defendants cheated the National Bank of Punjab out of approximately ₹13,578 crore. After the discovery of the alleged scam, the Enforcement Branch and the Income Tax Department conducted searches which resulted in the seizure of a large number of valuable assets.

In March 2020, ED auctioned 15 paintings related to Mr. Modi and his wife Ami Modi. They included Amrita Sher-Gil’s Boys with lemons (1935), which grossed ₹15.68 crore; MF Husain Battle of the Ganges and Jamuna: Mahabharata 12, which were sold for ₹13.44 crore; a work by Raja Ravi Varma (₹2.8 crore); a painting by VS Gaitonde (₹9.52 crore); and Manjit Bawa Untitled (₹6.16 crore).

Branded cars, sculptures, watches and bags were also auctioned off. A total of over ₹53 crore was raised through the auction.

The Income Tax Department, which had seized 173 paintings and other valuables from premises linked to Mr Modi in February 2018, also auctioned off 55 items for around ₹55 crore in March 2019. They included a painting of VS Gaitonde (₹25.24 crore) and Raja Ravi Varma (₹16.1 crore).

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