A $59.6 million (Rs 447 crore) loan extended by Deutsche Bank AG to a British Virgin Island (BVI) firm linked to Ajay Ajit Peter Kerkar, the promoter of Cox & Kings Ltd, has come under the scanner of investigating agencies as the loan was obtained in lieu of security given by a Hong Kong arm of the travel company, sources told The Indian Express.
In 2016, Kerkar’s Castleman Management Ltd in BVI borrowed $59.6 million from Deutsche Bank AG against a security given by Cox and Kings Asia Pacific Travel Ltd, in Hong Kong, a subsidiary of the listed firm Cox & Kings.
Subsequently, Castleman defaulted on the loan repayment. As a result, in July 2019, the bank took possession of the security deposit of around Rs 450 crore given by Cox and Kings Asia Pacific Travel.
Now, the arrested chief financial officer of Cox & Kings, Anil Khandelwal — in a statement to the Economic Offence Wing (EOW) of the Mumbai Police — has alleged that Kerkar’s Castleman in effect “siphoned” Rs 450 crore from Cox and Kings Asia Pacific Travel. Further, documents show that another BVI firm linked to Kerkar, Coad Investment Ltd, too had applied for a loan from Deutsche Bank against a security given by Cox and Kings Asia PacificTravel.
Records show that Castleman Management is owned by The Castle Cove Trust and Coad Investment by The Welcome Trust. Kerkar is the settlor of both these trusts and his wife is the ultimate beneficiary of the trusts.
“In transacting with its clients, Deutsche Bank strictly adheres to local laws and regulations. To your specific query, you will appreciate that we are not in a position to comment on individual clients or specific transactions,” said the official spokesman of Deutsche Bank in an email.
Kerkar, in an email statement, said Khandewal and his team have falsified the accounts of the foreign subsidiaries of Cox & Kings.
“Our auditors in London have already reported this to the National Crime Agency. In addition to this, the interim PWC forensics report dated January 2020 has clearly shown that thousands of crores of unauthorised payments to Alok industries, DHFL, Indiabulls and several hundred crores to companies controlled by SSG Capital Management (Singapore) Ltd, Anil Khandelwal, Naresh Jain and their families were illegally transferred by fake or non-existent board resolutions. To expose this fraud, I have registered two FIRs as complainant with the EOW and the Enforcement Directorate (ED) has opened a case to establish who is the real beneficiary of this fraud … Given the fact that I know Khandelwal has clearly misused forged and fabricated documents as well as diverted funds … I cannot give credence to any statement that is made by him,” said Kerkar.
Cox and Kings Asia Pacific Travel had net assets of Rs 1,354 crore as of March 2017, the last available financial records. The company made a loss of Rs 4.54 crore in that financial year.
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.
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. The travel and tour company owes Rs 5,500 crore to banks and financial institutions and is one of the top borrowers of Yes Bank Ltd.
Last week, the ED arrested Khandelwal, the CFO of Cox & Kings, and Naresh Jain, the internal auditor of Cox and Kings Group, in connection with the Yes Bank case money laundering case.
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