The Enforcement Directorate (ED) has alleged that Rana Kapoor, former chairman and co-founder of Yes Bank Ltd, instructed bank officials to not recover loans of Rs 3,642 crore from Cox and Kings Ltd, even though the defaulting travel firm had raised Rs 4,387 crore from selling its UK firm Holiday Break Education, in January 2019, according to the statements given by two senior Yes Bank officials to the agency.
These statements are a part of the prosecution complaint (chargesheet) filed by ED in the Rs 7,000-crore bank fraud pertaining to the now bankrupt Cox and Kings. The ED has alleged that Cox and Kings sold Holiday Break Education for £460 million after defaulting on loan repayments to Yes Bank and “siphoned” the sale proceeds.
Cox and Kings owes Rs 5,500 crore to banks and financial institutions and it is one of the top borrowers of Yes Bank. The listed travel firm was sent to bankruptcy court in October 2019, after it defaulted on payments.
The ED complaint against Cox and Kings and its arrested promoter Ajay Ajit Peter Kerkar has alleged that the top three customers of Cox and Kings — A K Travel, Holiday Break Travel and Worldwide Travels — operated from the residence of one of the directors of Liz Traders and Agents Pvt Ltd, a company owned by Kerkar.
The agency has alleged that Kerkar, along with the firm’s chief financial officer Anil Khandelwal, indulged in circular trading by “purchasing air tickets from other group companies of Cox and Kings and selling it to another group company Ezeego One Travels and Tours Ltd, to inflate the books of accounts”. “The purchase of tickets from Cox and Kings by Ezeego was around Rs 2,000 crore and sale to Cox and Kings was around Rs 400-500 crore,” said the Directorate in its complaint.
The ED said its probe has found that “the bonding and interdependence” between Kerkar and Khandelwal was “eye catching and inseparable in all respect”. “Initially Peter Kerkar, Anil Khandelwal and Naresh Jain and other associates were working in tandem and used to divert the money from the company for their personal use. Around 2018, the group started facing financial difficulties and investigating agencies and regulatory bodies started intervening in the matter of financial irregularities. Once the investigating agencies started investigation, they started blaming each other to save themselves…,” said the ED complaint.
The ED has arrested Kerkar, Khandelwal and the company’s internal auditor Naresh Jain in connection with the money laundering case. It has also been arrested Kapoor for allegedly taking kickbacks in lieu of granting loans to several companies that have now defaulted on repayments. Kapoor, who is in judicial custody, has denied these allegations.
The ED probe also found that between 2004 and 2019, Kerkar allegedly diverted Rs 426 crore and Rs 71 crore from Cox and Kings to its group companies V-Hotel Ltd and Tulip Star Hotel Ltd, respectively.
As per the chargesheet, Kerkar has allegedly transferred at least $15.34 million out of the sale proceeds of Holiday Break Education to Kuber Investment Mauritius Pvt Ltd, a Mauritius-based firm controlled by him. According to the agency, Khandelwal and Jain have directly siphoned Rs 275 crore from Cox and Kings to companies controlled by them.
In April 2019, The Indian Express, in a series of stories, reported that a forensic audit found Cox and Kings did related party transactions worth Rs 21,000 crore over four years (2015-2019) to siphon off funds. It also found that the travel firm 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.
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