BackYes Bank case: ED conducts searches at Cox and Kings premises
The bank had an exposure of ₹2,267 crore to the travel companyED had in March summoned Peter Kerkar, promoter of Cox and Kings, in connection with the case
PremiumMUMBAI: The Enforcement Directorate (ED) is conducting searches at five locations belonging to Cox and Kings Ltd in connection with the money laundering probe against Yes Bank co-founder Rana Kapoor and others, an official at the investigating agency said.
"The searches were conducted at the office of Cox and Kings, residence of key officials including promoter - Ajay Ajit Peter Kerkar, independent director - Pesi Patel, chief financial officer Abhishek Goenka and auditor Anil Khandelwal and Naresh Jain of Cox & Kings Group in Mumbai in Yes Bank fraud case of Rs. 3642 Crores," said the ED official.
This was the first such exercise by the probe agency since the lockdown came into effect on 25 March.
Yes Bank had an exposure of ₹2,267 crore to the travel company. ED in March had summoned Peter Kerkar, the promoter of Cox and Kings, in connection with the case against Rana Kapoor.
“During investigation, irregularities were also noticed in relation to the loan sanctioned to Cox & Kings Group. Group had created multiple layer of onshore and offshore subsidiary across the globe through which the monies were siphoned off," said the ED official quoted earlier in the story.
According to ED suspicious transactions involved Malvern Travel Limited, a UK based entity belonging to Cox and Kings group. The entity had outstanding dues of ₹493 crores, it submitted forged bank statement of RBS Bank, UK, State Bank of India, UK and forged end use certificates of BDO LLP (statuary auditor of the UK based entity) to avail loans from Yes Bank.
“The company forged its consolidated financials by forging balance sheets of the overseas subsidiaries," said ED official.
As per a forensic audit of the books of Cox and Kings by PricewaterhouseCoopers in February, most of borrowing transactions between the company and Yes Bank were without "proper approvals".
The forensic audit was commissioned by Yes Bank. The audit found nearly ₹21,000 crore worth of funds were allegedly siphoned off, ₹1,100 crore loan violated fiduciary norms and books were also inflated.
In the first chargesheet filed by ED in the Yes Bank case in May, the agency said the bank had created a credit watch list as of March 2019. The names included Cox and Kings, Dewan Housing Finance Ltd (DHFL), Reliance Group, Essel Group, and Radius Developers among others.
According to a report by The Indian Express on 24 April, Cox and Kings allegedly falsified financial statements between 2014 and 2019, overstated sales figures and understated debt. It made bogus sales of ₹5,278 crore to 147 customers between 2014 and 2019.
Further the audit pointed out falsification of accounts, overstating sales figures and understating debt figures, fictitious transactions between FY15 to FY19, sales of ₹3908 crores made to 15 non-existent/fictious customers.
Majority of collection shown in ledgers from Ezeego (another group entity) was not found in the bank statements. Another 147 sets of customers also seemed suspicious and non-existent, as per PWC report. Anil Khandelwal, CFO of CKL diverted ₹1100 Crore to Alok Industries Ltd without any approval of board, the report said.
ED also said the travel company also sold Holiday Break Education Limited, a UK based subsidiary for ₹4387 crores and instead of discharging the liability of bank, it siphoned off majority of the money.
“From this siphoning, USD 15.34 Million was transferred to Kuber Investment Mauritius Pvt Ltd which was controlled by Peter Kerkar," said the ED official.
Cox and Kings total dues to financial creditors stand at ₹5,900 crore. Many banks have already provisioned 15-25% till December 2019 for the account. Of all the banks, Yes Bank has the largest exposure, followed by ₹1,065 crore from Axis Bank, ₹635 crore from State Bank of India and ₹270 crore from IndusInd Bank. Cox & Kings has undergoing resolution at the National Company Law Tribunal (NCLT) since October 2019.
This is the second high-value borrower being probed by the ED after DHFL. The promoters of DHFL Kapil Wadhawan and Dheeraj Wadhawan are in ED custody in connection with the case.
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