Yes Bank case: ED raids CKG group's five places in Mumbai

Yes Bank outlet in New Delhi. Pic/ AFP

The Enforcement Directorate (ED) on Monday carried out searches at five locations in Mumbai linked to global tours and travel company Cox and Kings Group (CKG) in connection with Rs 3,642 crore Yes Bank fraud case.

The agency conducted raids at the premises of promoter, directors, CFO and auditor of CKG group named as Ajay Ajit Peter, Pesi Patel, Abhishek Goenka, Anil Khandelwal and Naresh Jain. The raids were carried out with an aim to gather information and proof of dealings between Yes Bank co-founder Rana Kapoor and Cox and Kings firm, said an agency source.

The ED took the action under its ongoing probe in the case under the Prevention of Money Laundering Act (PMLA), 2002. The agency said that Yes Bank has Rs 3,642 crore loan exposure to Cox and Kings firm -- one of the top borrowers of the bank.

Of the Rs 3,642 crore loan exposure, Rs 563 crore was borrowed by Cox and Kings Ltd (CKL), India; Rs 1,12 crore by Ezeego one travel and tours Ltd (EOTTL), India; Rs 422 crore by Cox and Kings Financial Services Ltd (CKFSL), India; Rs 1,152 crore by Prometheon Enterprise Limited, UK; and Rs 493 crore by Malvern Travel Ltd, UK.

During investigation, irregularities were also noticed in relation to the loan sanctioned to Cox and Kings Group, the ED said. "The Group had created multiple layers of onshore and offshore subsidiaries across the globe through which the monies were siphoned off."

Yes Bank filed a formal complaint in this regard on March 18 this year. It is learnt during investigation that Malvern Travel Limited, UK -- an entity of CKG -- was having outstanding of Rs 493 crore which submitted the forged bank statement of RBS Bank, UK; State Bank of India, UK and forged end use certificates of BDO LLP (Statutory Auditor of the UK based Entity) to avail loan from Yes Bank.

This forgery was pointed out by KPMG which is the administrator of this UK based entity. Cox and Kings Limited (CKL) forged its consolidated financials by forging the balance sheets of the overseas subsidiaries. The same was informed to BSE/NSE by the resolution professional in writing.

The statutory auditor of the Prometheon Enterprise Limited (PEL), UK -- a subsidiary of CKG -- was Raffingers UK LLP. The financials of PEL were sent to India by fictitious domain name impersonating the current officials of Raffingers UK LLP. For this, Raffingers UK LLP filed a criminal complaint to the National Crime Agency, UK.

After default by CKL, the lenders appointed PricewaterhouseCoopers (PWC) for forensic audit but the management did not cooperate. However, based on the limited data available with them, PWC confirmed falsification of accounts, overstating the sales figures and understating the debt figures as well as fictitious transactions. PWC reported that from 2015 to 2019, sales of Rs 3,908 crore were made to 15 nonexistent or fictitious customers. Majority of collection shown in ledgers from Ezeego (another group entity) was not found in the bank statements. Another 147 sets of customers are also suspicious and not existent, as per PWC report.

As per the report, Anil Khandelwal, CFO of CKL, diverted Rs 1,100 crore to Alok Industries Ltd without any approval of the board. CKG sold Holiday Break Education Limited, UK (HBEL) -- a subsidiary of CKG -- for Rs 4,387 crore and instead of discharging the liability of the bank, they siphoned off the majority of the money. From this siphoning, $15.34 million was transferred to Kuber Investment Mauritius Pvt Ltd which was controlled by Peter.

From Ezeego, Rs 150 crore was diverted to Redkite Capital Private Limited which was promoted by Anil Khandelwal, CFO of CKL and Naresh Jain (Internal Auditor of CKL).

The fund diverted to Redkite was used to buy controlling stake in Tourism Finance Corporation Of India Ltd, a listed NBFC.

The ED registered a case against former MD and CEO of Yes Bank Rana Kapoor on March 7 this year on the basis of a First Information Report (FIR) registered by the Central Bureau of Investigation. The agency arrested Rana Kapoor on March 8 and also filed its first chargesheet in the case before a special PMLA court in Mumbai in the first week of May.

Kapoor is accused of sanctioning loans to certain firms against kickbacks.

Among other things, the central probe agency is investigating Rs 600 crore received by a company allegedly controlled by Kapoor, his wife and three daughters from an entity linked to the scam-hit Dewan Housing Finance Limited (DHFL). Kapoor and his family members allegedly got benefits worth Rs 4,300 crore through the companies controlled by them as kickbacks for sanctioning huge loans, the ED has alleged.

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