The Enforcement Directorate (ED) has found that YES Bank co-founder Rana Kapoor and his family set up over a dozen shell firms that were allegedly used for receiving kickbacks to the tune of Rs 4,300 crore and invested in properties illegally.
The agency arrested Kapoor, 62, early Sunday morning in connection with a money-laundering probe — three days after the Reserve Bank put YES Bank under a 30-day moratorium and superseded its board. Kapoor was produced in a Mumbai sessions court, which remanded him in ED custody till March 11. The agency told the court that Kapoor’s custody was required to investigate the role of some companies run by his family members, and are directly and indirectly controlled by him.
“Kapoor obtained undue pecuniary advantage from DHFL (Dewan Housing Finance Corporation) in the matter of investments in the debenture of DHFL by YES Bank, through the companies held by his wife and daughters. It is also apprehended that Kapoor had misused his official position in several other transactions and obtained illegal kickbacks directly or indirectly through entities controlled by him and his family members,” the ED said in the remand to court, which was seen by the Business Standard.
“Prima facie, there appears to be generation and laundering of proceeds of crime to the tune of Rs 4,300 crore by the ‘accused’ persons under Prevention of Money Laundering Act (PMLA), 2002,” the ED said, adding further investigation into the money trail of the proceeds was under progress.
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The agency arrested Kapoor, 62, early Sunday morning in connection with a money-laundering probe — three days after the Reserve Bank put YES Bank under a 30-day moratorium and superseded its board. Photo: PTI
Sources said these firms used the kickback amounts to buy properties valued at Rs 2,000 crore. The current market value of the assets could be more than Rs 5,000 crore, said ED officials.
The agency is in possession of some crucial documents that show Kapoor bought two properties in the UK, and their valuation of which is underway. The probe agency also seized 44 paintings from Kapoor’s residence.
Roshini, Kapoor’s daughter, was stopped by immigration authorities from taking a Mumbai-London flight as a look-out-circular had been issued against Kapoor family members by the ED. The ED started its probe last Friday based on a first information report (FIR) filed by the Central Bureau of Investigation (CBI). The CBI in the FIR alleged Kapoor entered into a criminal conspiracy with DHFL promoters Kapil Wadhawan and others for extending financial assistance to DHFL by YES Bank in lieu of substantial undue benefits to himself and his family members through the companies held by them.
The CBI FIR also names DoIT Urban Ventures, a company allegedly held by Kapoor’s family members.
Rana Kapoor’s wife Bindu Kapoor at ED’s office in Mumbai on Sunday. Photo: Kamlesh Pednekar
The ED remand copy cited the CBI report and has explained the transaction between DHFL and Kapoor and his business enterprise in detail. According to the remand copy, DHFL had sanctioned a loan of Rs 600 crore to DoIT in 2018 for repayment of an earlier loan of Rs 300 crore and rest for general corporate purpose. This loan was against the five properties valued at Rs 40 crore as collaterals. This happened when DHFL had already defaulted on a Rs 3,700-crore loan given by YES Bank. DHFL, however, arrived at the valuations of these properties at Rs 735 crore on the basis of future development potential, according to the instruction of Wadhawan. The valuations were done assuming these land parcels would be converted from agricultural use to residential. However, there has been no change in status as of now. According to the ED, the assessed value would have only been Rs 485 crore even after conversion of land use. Therefore, the claimed value of these properties is highly inflated.
The ED also highlighted another loan of Rs 750 crore, which was disbursed in 2018 by YES Bank to Belief Realtors (an RKW Group Company) for redevelopment of Bandra Reclamation project. Of the said amount, Rs 118 crore was taken by YES Bank as processing fees and balance Rs 632 crore was transferred to RKW and from there, immediately to KYTA Advisors through three group companies of Dheeraj Realty. The advisor company transferred the full amount to DHFL immediately.
Kapoor, during the interrogation on the said transaction, said that in 2018 they purchased debentures worth Rs 3,000 crore from DHFL, and Rs 600 crore loan against property was sanctioned to DoIT by DHFL in August 2018. According to him, he believed that property mortgaged and securities and monetisation of various investments of DoIT would be able to cover the loan risk and repayment of loan on the due date. However, he was not cooperating with the investigation with regard to further utilisation of monies received from DHFL.
In the remand, ED said that all accused played a crucial role in money laundering and “sustained interrogation under custody” was required. The defence lawyer, however, said Kapoor had been selectively targeted by the ED and that the agency was trying to connect link with DHFL as Kapoor is socially close to its promoters.