The Enforcement Directorate on Monday conducted searches at five locations linked to Cox & Kings in Mumbai, in connection with a money laundering probe involving the Yes Bank and its former director-promoter Rana Kapoor, according to the agency.
The ED said that in the bank fraud case involving ₹3,642 crore, the premises of Ajay Ajit Peter Kerkar, Pesi Patel, Abhishek Goenka, Anil Khandelwal and Naresh Jain, the promoter, directors, Chief Financial Officer and auditor of the group, were searched.
Changes in PMLA Act empower ED
Cox & Kings Limited (CKL), India, had an outstanding of ₹563 crore; ₹1,012 crore due against Ezeego One travel & Tours Limited; ₹422 crore against Cox & Kings Financial Services Limited; ₹1,152 crore against Prometheon Enterprise Limited (U.K.); and ₹493 crore against Malvern Travel Limited (U.K.).
The ED probe is based on a case registered by the CBI on March 7, against Mr. Kapoor and others. It pertains to about ₹3,700 crore in loans extended to Dewan Housing Finance Corporation Limited (DHFL), allegedly in lieu of ₹600 crore.
The FIR alleges that in April-June 2018, Yes Bank invested the funds in the short term debentures of DHFL. Simultaneously, DHFL managing director Kapil Wadhawan allegedly paid the kickback in the garb of loan from DHFL to DOIT Urban Ventures (India) Private Limited (Rana Kapoor group company).
Yes Bank also sanctioned a loan of ₹750 crore to a RKW Developers group company, beneficially owned by Mr. Kapil Wadhawan, Dheeraj Wadhawan and their family members. The amount was allegedly siphoned off using shell firms.
On March 8, the ED arrested Mr. Kapoor and he is currently in judicial custody. During the probe, it noticed irregularities in the loans sanctioned to the Cox & Kings group. It had allegedly diverted funds via multiple layers of onshore and offshore subsidiaries. The bank filed a formal complaint in this regard on March 18.
Forged documents
The ED found that Malvern Travel had allegedly submitted forged statements of U.K.-based RBS Bank and State Bank of India, and end-use certificates of its statuary auditor, BDO LLP, and the alleged forgery was pointed out by KPMG, administrator of the U.K.-based entity.
CKL forged balance sheets of its overseas subsidiaries. It was reported to the Bombay Stock Exchange and the National Stock Exchange by the resolution professional, the ED said.
Prometheon Enterprise's financials were sent to India allegedly by a fictitious domain name impersonating the current officials of Raffingers U.K. LLP, its statutory auditor, which filed a criminal complaint in this regard with the National Crime Agency in the U.K.
After default by CKL, the lenders appointed PwC for forensic audit, but the management did not cooperate. Based on the limited available data, PwC confirmed falsification of accounts, overstating sales figures, understating debt figures and other irregularities.
“PwC reported that from 2015 to 2019, sales of Rs.3,908 crore were made to 15 non-existent customers. A majority of collection shown in ledgers from Ezeego was not found in the bank statements. Another 147 sets of customers are also suspicious. The report said Anil Khandelwal, CFO of CKL, diverted Rs.1,100 crore to Alok Industries Limited without the board's approval,” said an ED official.
The ED alleges that CKG sold U.K.-based subsidiary, Holiday Break Education Limited, for ₹4,387 crore and siphoned off most of the funds, instead of repaying loans. About $15.34 million was transferred to Kuber Investment Mauritius Private Limited, allegedly controlled by Peter Kerkar.
From Ezeego, ₹150 crore was allegedly diverted to Redkite Capital, promoted by Mr. Khandelwal and Naresh Jain (internal auditor of CKL). It was used to buy controlling stake in Tourism Finance Corporation of India Limited, said the ED.
