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Yes Bank case: ED arrests Cox & Kings’ CFO Anil Khandelwal and internal auditor Naresh Jain

Khandelwal and Jain were produced before a PMLA court in Mumbai on October 6, which remanded them to ED’s custody for a week

October 06, 2020 / 10:27 PM IST
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The Enforcement Directorate (ED) on October 6 arrested two former senior officers of debt-ridden travel firm Cox & Kings Group (CKG), 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 CKG, under provisions of the Prevention of Money Laundering Act (PMLA).

Khandelwal and Jain were produced before a PMLA court in Mumbai on October 6, which remanded them to ED’s custody for a week.

CKG 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, a source in the agency told Moneycontrol.

During the investigation into the Yes Bank case, it surfaced that CKG forged its consolidated financials by manipulating the balance sheets of overseas subsidiaries, overstating the sales figures and understating the debt figures and fictitious transactions.

Some board resolutions submitted to banks for sanctioning the loans were also found to be forged. “Malvern Travel, UK submitted the forged bank statement of RBS Bank, UK and State Bank of India, UK. It also forged end used certificates of a UK-based statuary auditor to avail a Rs 422 crore loan from Yes Bank," an ED official said on condition of anonymity.


Subsequent investigations revealed that the loan sanction from Yes Bank was driven by former Managing Director and CEO Rana Kapoor by bypassing norms. Another source said that the agency has evidence which shows Kapoor giving clear instructions to concerned bank officials to take no efforts to recover the loan proceeds or declare it bad.

Between FY15 and FY19, CKG showed sales worth Rs 3,908 crore to 15 non-existent/fictitious customers, an audit report of Pricewaterhouse Coopers (PwC) stated. It also identified 147 additional ‘suspicious and non-existing customers’ and 15 high value ‘fictitious’ debtors in its books of accounts.

"Majority of the collections shown in ledgers of Ezeego One Travel & Tours (another group entity of CKG) was not found in the bank statements,” it said.

As per the PwC report, Cox & Kings (CKL) diverted Rs 1,100 crore to Alok Industries, another stressed company, which has no business relationship with it, without the board’s approval.

During this whole process, Khandelwal and Jain acquired mortgaged property amounting to Rs 63 crore in their owned business entity -- M/s Reward Business Solutions -- without paying a penny from their pocket, the probe agency found.

Further investigations revealed that Khandelwal and Jain purchased various immovable properties from the funds diverted from CKG, the source said. “An investigation revealed that Rs 150 crore was diverted from Ezeego to Redkite Capital Pvt, which was promoted by family members of Khandelwal and Jain. Bank transactions of CKG too did not match with Redkite Capital’s books of accounts, thus revealing the fraud,” the source added.

Court rejects CBI’s remand application of Rana Kapoor

In related news, the Central Bureau of Investigation’s (CBI) remand application of Rana Kapoor, co-founder of Yes Bank, was rejected by the Esplanade Court in Mumbai on October 6. The central probe agency had sought a remand on three grounds as they wanted to: 1) Confront Kapoor with certain emails and documents which are in their custody; 2) Confront Kapoor with the other co-accused; and 3) Confront with other employees of Yes Bank.

CBI stated in court that Kapoor was being evasive during interrogation in jail. Kapoor continues to remain in ED’s judicial custody since late March.

However, Kapoor’s advocate Chandansingh Shekhawat countered that his client was already named in the over 21,000 page charge sheet. “So, if the CBI wanted to investigate Kapoor, they should have not named him in the charge sheet and they should have kept their investigation pending. Today, with the CBI filling its charge sheet, what remains is only a formal compliance of bond.”

After listening to both parties, the court rejected CBI’s remand plea.
Moneycontrol News
first published: Oct 6, 2020 10:27 pm

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