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Tuesday, August 04, 2020

Yes Bank money laundering case: ED raids five premises of Cox and Kings in Mumbai

The teams of the central agency are carrying out the searches under the Prevention of Money Laundering Act (PMLA), officials said.

Written by Khushboo Narayan | Mumbai | Updated: June 8, 2020 7:49:36 pm
Cox & Kings raid, Cox & Kings offices raided in Mumbai, Cox & Kings yes bank dealings, Cox & Kings yes bank case, yes bank money laundering case Cox & Kings CFO Anil Khandelwal (left) and Promoter Peter Kerkar. (File photo)

The Enforcement Directorate (ED), Monday, searched the office of the bankrupt travel firm Cox & Kings, the residences of its promoter Ajay Ajit Peter Kerkar, its chief financial officer (CFO) Anil Khandelwal, its internal auditor Naresh Jain and two other directors of the company, in connection with a Rs 3642 crore fraud at Yes Bank Ltd.

The ED in a statement said it searched the travel company under the Prevention of Money Laundering Act (PMLA) after it began its probe into the dealings of Yes Bank Ltd, former co founder Rana Kapoor.

Kapoor, currently lodged in jail, is accused of taking kickbacks in lieu of granting loans to several companies that have now defaulted on repayments.

In April, The Indian Express in a series of stories reported that a forensic audit found the travel did 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 9000 crore to over 160 customers who are bogus or do not exist and inflated bank balances.

Also read | Cox and Kings Dossier – Part 1: Audit uncovers siphoning of crores, fudging of records and bogus sales

The ED investigation has found alleged “irregularities in relation to the loan sanctioned to Cox & Kings Group” by Yes Bank. The ED said that Cox and Kings has “created multiple layer of onshore and offshore subsidiary across the globe through which the monies were siphoned off”.

Cox and Kings, promoted by Kerkar, his family and a few of their firms, 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 it is one of the top borrowers of Yes Bank Ltd.

Also read | Cox and Kings Dossier – Part 2: ‘Conspiracy, fraud’ – Loan diverted to firm run by top executives, including auditor

The forensic audit, done in February 2020 by of PricewaterhouseCoopers (PWC) at the behest of lender Yes Bank, has alleged the company fudged records and window-dressed its figures.

It also found 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, Chief Financial Officer (CFO) of Cox & Kings Anil Khandelwal is the brother of the CFO of Alok Industries.

The forensic audit has alleged that most of the related party transactions of Cox & Kings were executed without “proper approvals” from its board and without any loan agreement.

In March 2020, Kerkar was summoned for questioning by ED in connection with the money laundering case against Kapoor.

While the promoter group owns 12.20 per cent shares in Cox and Kings, the public owns the remaining 87.80 per cent.

The ED on Monday said Yes Bank on March 18 filed a complaint against Cox and Kings for alleged fraud with the agency.

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.

The probe agency also said the Ezeego Travel and Tours, another subsidiary of the group allegedly diverted Rs 150 crore to Redkite Capital Private Ltd, a company promoted by its employees Anil Khandelwal and Naresh Jain. “This fund diverted to Redkite was used to buy controlling stake in Tourism Finance Corporation Of India Ltd, a listed NBFC,” said ED.

The probe agency has also alleged that Malvern Travel Limited, the UK firm of Cox and Kings submitted forged bank statement of RBS Bank, State Bank of India and forged end use certificates of BDO LLP to avail a Rs 493 crore loan from Yes Bank. “In relation to Cox & Kings Limited (CKL), the company forged its consolidated financials by forging the balance sheets of the overseas subsidiaries,” said the ED.

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