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The Enforcement Directorate (ED) arrested Avantha group promoter and industrialist Gautam Thapar at the end of a two-year probe into a case of suspected money laundering.

Thapar, who was taken into custody late on Tuesday night, was booked under the Prevention of Money Laundering Act (PMLA), according to a person familiar with the matter. This came after a multi-agency probe pointed to his involvement in bribing Yes Bank Ltd’s former managing director Rana Kapoor to secure loans that soured later. Thapar’s arrest also follows raids on his businesses in Delhi and Mumbai earlier this year.

In March 2020, the Central Bureau of Investigation (CBI) had booked Kapoor, his wife Bindu, Avantha Group promoter Gautam Thapar and Bliss Abode Pvt. Ltd, among others, in a case of criminal conspiracy, cheating, and “illegal gratification in lieu of favours extended in connection with official work".

The case centres around a bungalow at Delhi’s upmarket Amrita Shergill Marg, owned by Thapar’s Avantha Realty Ltd. Avantha group borrowed from Yes Bank by pledging the bungalow as collateral, but the loans soured, and Yes Bank took possession of the bungalow, which was then sold to Kapoor’s Bliss Abode.

The CBI’s first information report (FIR) had alleged that Kapoor and his wife were given a bribe of 307 crore in the form of the bungalow at half the market price for facilitating around 1,900 crore of loans to Avantha group in return.

The CBI FIR alleged Yes Bank under Kapoor helped Avantha group firms by extending concessions, relaxations and waivers to existing credit facilities, besides approving additional loans. According to CBI, ICICI Bank valued the Amrita Shergill bungalow at 550 crore.

In June, the CBI booked Thapar and others in another case where he is said to have illegally diverted loans worth 2,435 crore to CG Power and Industrial Solutions (CG Power), a firm he promoted.

Thapar’s legal troubles began in August 2019 after the board of CG Power reported him to Securities and Exchange Board of India (Sebi) and the ministry of corporate affairs (MCA) for diverting company funds to related entities. He was also removed as chairman of CG Power, which was later sold to the Murugappa group.

Thapar hails from one of India’s most prominent business families. The diversified Avantha group has a presence in power, paper and industrial component manufacturing, among others. Thapar is widely credited with turning around group businesses he inherited from his illustrious uncle L.M. Thapar, which became part of the Avantha group later.

However, problems began after Thapar’s foray into the power sector ran into multiple issues, leading to a huge accumulation of debt. Similarly, the acquisition of Sabah Forest Industries for $260 million by his Ballarpur Industries failed as the returns were nowhere where what was expected. To fund the losses, Thapar ended up selling his crown jewel, Crompton Greaves. The firm was split into a consumer unit called CG Power Consumer Electricals and an enterprise unit called CG Power and Industrial Solutions. The first was sold to private equity firms, while Thapar lost control of the second.

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