Yes Bank case: ED files second prosecution complaint, names 19 individuals and entities

The Enforcement Directorate (ED) has filed the second prosecution complaint in the Yes Bank money laundering case. The complaint has been filed against 19 people and entities, including eight people and entities prosecuted earlier by the investigating agency.

Former chairman of DHFL Kapil Wadhawan and former director of DHFL Dheeraj Wadhawan are named in the prosecution complaint. The ED has retained eight names in the previous chargesheet, including former managing director of Yes Bank Rana Kapoor, his wife Bindu Kapoor, Kapoor's three daughters Radha Kapoor, Roshni Kapoor and Rekha Kapoor, Doit Urban Ventures Pvt Ltd and Yes Capital.

This is the first time the ED has named Yes Capital, Dewan Housing Finance Limited,  Kyata Advisors Ltd, RKW Developers and Belief Realty in the charge sheet.

The agency also booked Dhulresh Jain, who was the chartered accountant of Belief Realty, Yes Golden Western private Ltd, Samapti Trading Pvt Ltd and Valencia Developers.

Earlier this month, the ED provisionally attached properties worth Rs 2400 crore belonging to Rana Kapoor and the Wadhawan brothers. Kapoor’s attached properties are located in South Mumbai, 40 Amrit Shergill Marg in Delhi, London and New York. Wadhawan’s properties are in Mumbai, Pune, Australia and London.

The investigating agency has also raided the premises of travel company Cox and Kings and recorded statements of its founder Peter Kerkar and media baron Subhash Chandra in this case.

According to the prosecution, Kapoor and members of his family and the other accused laundered the proceeds of crime. The estimated size of fraudulent deals is around Rs 5,050 crore, and members of the Kapoor family or family-owned entities received Rs 600 crore in kickbacks in lieu of extending loans through the bank, which later turned into non-performing assets. The amount appears to have been further utilised for procuring more properties.

Yes Bank had sanctioned a loan of Rs 750 crore to Belief Realtor Pvt. Ltd, a company controlled by the DHFL group. The loan was sanctioned on June 18, 2018, by the Management Credit Committee (MCC) headed by Rana Kapoor, who was then the MD and CEO of Yes Bank.

The loan was disbursed on September 27, 2018. Prior to that, in August 2018, the MCC had approved an additional loan of Rs 950 crore to Belief Realtors. Since the loan amount of Rs 1,700 crore required a Board Credit Committee (BCC) approval, this item was required to be placed in the BCC, scheduled for August 28, 2018. But, the subject was not discussed in the meeting. On August 29, 2018, a separate loan of Rs 950 crore was sanctioned by the MCC to RKW Developers Pvt Limited.

The loan was shifted to RKW Developers instead of increasing the loan amount to Belief Realtors as sanctioning Rs 950 crore was within the powers of the MCC. While the documentation for the loan to RKW Developers was underway, the Reserve Bank of India (RBI) started a special audit and, on the basis of that, the sanction to RKW was cancelled.

As per the statement given by Kapoor to the ED, in 2018, DHFL issued retail senior public debentures worth Rs 8,000-10,000 crore, and approximately Rs 3,000 crore was allocated for purchase by Yes Bank as per the BCC approval. He also stated that a loan of Rs 1,200 crore had been given by Yes Bank to Aadhar Housing Finance, a DHFL group company.

Another loan of Rs 600 crore against property was sanctioned by DHFL to Doit Urban Ventures India Ltd, a company wholly owned by Morgan Credits Pvt. Ltd. (MCPL). MCPL, in turn, is owned by Kapoor's three daughters.

Kapoor further stated that two earlier loans of Rs 300 crore each had been given to Doit by DHFL, which were duly closed in August 2018. Later, a renewed loan of Rs 600 crore was granted. Against this loan, Doit mortgaged five properties, though Kapoor was not sure if the valuation of these properties was carried out at the time of its mortgage.

The Wadhawans have put up a proposal for a loan of about Rs 1,700 crore from Yes Bank in the name of Belief Realtors PVT Limited (BRPL) for the redevelopment of slums at Bandra Reclamation.

Dheeraj wanted to pay DHFL standing in the name of RIP Developers. By that time, the company for which the loan had to be applied was not decided. At that time, for the Bandra Reclamation project, there was a deed of assignment between RIP Developers and Wizard Constructions (India) Pvt Limited. RIP Developers was owned by Gopal Dalvi, a very close friend of Dheeraj Wadhawan.

On this Bandra Reclamation Project, they took a loan of Rs 725 crore from DHFL which was invested by the Wadhawans for purchasing the preference shares of Kyta Advisors Pvt Limited. It was never used for the declared end use. Yes Bank never intended to give the loan to RIP Developers as it was not declared as their group company.

Therefore, the Wadhawans decided to obtain the loan in the name of BRPL as it was beneficially owned by them.

Yes Bank bifurcated the loan into two parts as they were getting some problem in sanctioning the loan in one entity. Accordingly, Rs 750 crore was sanctioned in the name of BRPL and Rs 950 crore in the name of RKW Project Management Private Limited.

However, the loan to RKW could not be disbursed as it was cancelled by Yes Bank. The loan of Rs 750 crore, after disbursement, was ultimately transferred to DHFL after several layering.

The earlier prosecution complaint named eight persons and entities which included Rana Kapoor, his wife Bindu Kapoor , daughters Rakhee, Roshni and Radha, and three entities namely Morgan Credit Pvt Ltd, Yes India Capital Pvt Ltd and Rab Enterprises, owned and controlled by Kapoor's family.