NEW DELHI (Reuters) – India’s Ministry of Corporate Affairs (MCA) has taken a “very serious note” of allegations of financial mismanagement against Dewan Housing Finance Corp Ltd (DHFL), a government source with direct knowledge of the matter told Reuters on Wednesday.

Investigative media outlet Cobrapost on Tuesday said Dewan diverted funds to shell companies to buy assets, and that firms linked to Dewan’s controlling shareholders – the Wadhawan group – made political donations beyond mandated levels.

The company on Wednesday said the report was unfounded and malicious, and that it had engaged lawyers to defend itself.

The government will likely inspect the records of Dewan Housing and “further action” against the company and its directors cannot be ruled out, said the source, who declined to be named due to the sensitivity of the matter.