The Enforcement Directorate has arrested debt-ridden travel firm Cox and Kings' promoter Peter Kerkar in the alleged money-laundering case.
Last month, the ED arrested two former senior officers of the travel firm, which is one of the defaulters of Yes Bank, as part of its money-laundering probe against the bank’s founder Rana Kapoor. The agency arrested Anil Khandelwal, CFO, and Naresh Jain, internal auditor of Cox and Kings, under provisions of the Prevention of Money Laundering Act (PMLA).
The travel company fell under the ED’s scanner after the agency detected alleged irregularities in the grant of loans worth Rs 3,642 crore to it by Yes Bank, which are still outstanding. The agency suspects that the loan sum was allegedly siphoned abroad via subsidiaries located in India.
The scam is estimated at a little over Rs 20,000 crore and involves many banks across India that gave loans to the company but never got them back. The firm owes Axis Bank Rs 1,030 crore, IndusInd Bank Rs 239 crore and Kotak Mahindra Bank Rs 174 crore, according to the ED.
Kerkar had lodged complaints in Mazgaon court, which were turned into the two FIRs following a court order. While one case (Rs 4,448 crore) was registered on September 3, the other (Rs 1,116 crore) was filed the next day.
The current case pertains to a loan of Rs 3,642 crore taken by Cox and Kings from Yes Bank. The money was never returned.
Set up in 1758 and headquartered in the UK and India, Cox & Kings was once one of India’s top tour and travel companies. It had more than 3,000 workers. Charges of financial misappropriation have swirled around the company for some years, but its collapse began last year when it began to default on a series of loan payments. It did not pay salaries to staff for months before shutting shop.
In the Yes Bank case, over five years (2015-19), as many as 15 fictitious customers, including a subsidiary named Ezeego, were set up by Cox & Kings for taking the loans, according to investigators. ED found these fictitious high-value debtors in the books of accounts and also another 147 sets of non-existent customers.
Cox & Kings, ED found, had diverted Rs 1,100 crore to another stressed company with which it has no business relationship. The transfer was done without the approval of the Cox & Kings board.
Investigations showed Rs 150 crore were diverted from Ezeego to RedKite Capital, promoted by the family members of Khandelwal and Jain.
In another incident, according to ED, Cox & Kings sold one of its subsidiaries, Holiday Break Education Limited, UK (HBEL), for Rs 4,387 crore and instead of discharging the liability of the bank, the company siphoned off a majority of the cash. An estimated $15.34 million was transferred to Kuber Investment Mauritius, which was controlled by Kerkar.