The Enforcement Directorate (ED) Thursday arrested Ajay Ajit Peter Kerkar, the promoter of bankrupt travel firm Cox and Kings, in connection with its money laundering probe.
Cox and Kings owes Rs 5,500 crore to banks and financial institutions and it is one of the top borrowers of Yes Bank Ltd when co-founder Rana Kapoor was at the helm. Yes Bank has an exposure of more than Rs 2,267 crore to Cox & Kings Group.
The travel firm came under the scanner the agency initiated an investigation into allegations of kickbacks taken by Kapoor in lieu of granting loans to several companies that have now defaulted on repayments. Kapoor, who is currently under arrest, has denied these allegations.
In April, The Indian Express, in a series of stories, reported that a forensic audit found the travel company undertook related party transactions worth Rs 21,000 crore over four years (2015-2019) to siphon off funds. It also found that Cox & Kings had falsified records, booked sales worth Rs 9,000 crore to over 160 customers who are bogus or do not exist and inflated bank balances.
Last month, the ED had arrested the firm’s chief financial officer, Anil Khandelwal, and its internal auditor, in connection with the case.
The audit conducted by PricewaterhouseCoopers (PWC) later found that the company recorded related party loans and advances of Rs 9,494 crore during the same period, of which about Rs 4,008 crore was loaned to 11 overseas entities connected to Cox & Kings. As per the audit report reviewed by The Indian Express, out of these offshore transactions, transfers of Rs 581 crore was allegedly done in violation of the Reserve Bank of India (RBI) norms.
The forensic audit also found the company did not take board approvals for Rs 6071 crore loans extended to at least 20 related parties between 2014 and 2019.
The audit revealed that Cox and Kings gave Rs 1100 crore to Alok Industries, a stressed firm that went bankrupt in 2017, even as the travel firm did not have any business relationship with the company. Significantly, Khandelwal is the brother of the CFO of Alok Industries.
The ED has found that Cox and Kings sold it UK subsidiary– Holiday Break Education Limited, UK (HBEL) for Rs 4387 crore and “siphoned off majority of the money”. Out of the sale proceeds, at least $ 15.34 million was allegedly transferred to Kuber Investment Mauritius Pvt Ltd, a firm was controlled by Ajay Ajit Peter Kerkar.
Ezeego Travel and Tours, another subsidiary of the group, is accused of diverting Rs 150 crore to Redkite Capital Private Ltd, a company promoted by CFO Khandelwal and auditor Jain. This fund was used to buy controlling stake in Tourism Finance Corporation Of India Ltd, a listed NBFC.
Cox & Kings — promoted by Kerkar, his family and a few of their firm — was sent to bankruptcy court in October 2019, after it defaulted on payments.
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