THE ENFORCEMENT Directorate (ED) arrested Rana Kapoor, founder and promoter of Yes Bank, at 4 am Sunday after over 36 hours of interrogation on allegations that he received kickbacks through a Rs 600-crore loan given by Dewan Housing Finance Limited (DHFL) to a company owned by his family. At the time, the ED claimed, Yes Bank had a debt exposure of Rs 3,700 crore to DHFL.
Kapoor was produced in the afternoon before a court in Mumbai, where he claimed that the Rs 600 crore was “borrowed independently” by his “children’s company”. With the ED also claiming that the case involved money-laundering of “proceeds of crime” to the tune of Rs 4,300 crore, Kapoor was remanded in the agency’s custody till March 11.
Later Sunday, the ED detained Kapoor’s daughter Roshini Kapoor from the Mumbai international airport, based on a Lookout Circular, and began questioning her.
In court, the ED said that the CBI had already registered an FIR Saturday against Rana Kapoor, DOIT Urban Ventures, which is linked to his family, and DHFL’s Kapil Wadhawan under charges of alleged criminal conspiracy and corruption.
ED sources said it subsequently registered a separate case under the Prevention of Money Laundering Act against Kapoor, DOIT Urban Ventures and DHFL’s Wadhawan. The ED had so far been probing DHFL and Kapoor in connection with alleged scams linked to gangster Iqbal Mirchi and the UP state employees provident fund.
Responding to the ED’s charges on the loan from DHFL, Kapoor’s lawyer claimed that the agency was “selectively joining dots” and that the Rs 600-crore loan is a “performing one”, whose interest is being paid, and not a Non-Performing Asset (NPA). “This is selective targeting because there is public outrage. You put blame and make one man a scapegoat,” Kapoor’s lawyer, Zain Shroff, told the court.
Addressing the court with folded hands, Kapoor claimed he had been “sick and hallucinating” since 2019, “when I lost my baby, Yes Bank”, and was undergoing treatment. The RBI had asked him to step down as MD and CEO of Yes Bank in January 2019.
ED sources claimed that among the assets being probed are expensive paintings, including one bought from Congress leader Priyanka Gandhi Vadra.
Speaking to reporters, Congress leader Abhishek Manu Singhvi said that an M F Husain painting — a portrait of Rajiv Gandhi — was sold to Rana Kapoor for Rs 2 crore in 2010. “The entire amount was received in cheque and was fully disclosed in the Income Tax return of 2010 by Priyanka Gandhi Vadra,” Singhvi said.
According to the ED, the Rs 600-crore loan was given in 2018 by infrastructure company DHFL, whose promoters included Kapil Wadhawan. “During April to June 2018, Yes Bank Limited invested Rs 3,700 crore in the short-term debentures of DHFL. Simultaneously, Kapil Wadhawan paid a kickback of Rs 600 crore to Rana Kapoor and his family members in the garb of loan given by DHFL to DOIT Urban Ventures (India) Pvt Ltd (a Rana Kapoor Group Company),” the ED alleged in its remand application.
The ED claimed that Kapoor entered into a “criminal conspiracy” with Wadhawan for extending financial assistance to DHFL by Yes Bank in lieu of “substantial undue benefit to himself and his family members through the companies held by them”.
Special public prosecutor, Sunil Gonsalves, told the court that the three daughters of Kapoor, who held 100 per cent shares of DOIT Urban Ventures, had never interacted with DHFL personnel for the loan. The ED claimed that the interaction with DHFL for the loan was done by a secretary of Kapoor in Yes Bank.
“It is apparent that behind the facade of… (DOIT), Kapoor was the person on ground interacting with Wadhawan for sanction of loan,” the ED claimed, adding that the transactions were “suspicious” due to which searches were conducted at Kapoor’s residential premises Friday night.
According to the ED, the loan from DHFL was for repayment of an earlier loan of Rs 300 crore and for “general corporate purpose”. It claimed that the mortgage for the loan included land in Alibaug and Raigad, shown to have a value of Rs 735 crore.
The ED claimed that this value was “highly inflated” as the acquisition cost of the properties was only Rs 39.66 crore. It told the court that the valuation was done by DHFL on the assumption the land would be converted from agricultural to residential and used for construction and an eco-tourism project. But as of now, there was no change in the status of the land, the ED said.
The ED told the court that while the principal amount on the loan was to be repaid in 2023, it would probe how Rs 4,300 crore was allegedly laundered in various transactions with DHFL.
The ED also alleged other loans by Yes Bank were also under scanner. These included one of Rs 750 crore linked with Kapil Wadhawan and Dheeraj Wadhawan, also named as accused in the Iqbal Mirchi case linked to DHFL. “It is also apprehended that Rana Kapoor has similarly misused his official position in several other transactions and obtained illegal kickbacks directly or indirectly through entities controlled by him or his family members,” the ED claimed.
In the court, Kapoor said: “My children’s company borrowed Rs 600 crore independently and Rs 130.5 crore interest has been paid on that. There is full security. Every iota of interest has been paid over the last two-and-a-half years by my daughters. This is about women entrepreneurship… there is no link I promise.”
He said that DHFL had an AAA rating at the time of its transactions with Yes Bank.
ED sources, meanwhile, said that Lookout Circulars have been opened against all members of Rana Kapoor’s family. They claimed members of the family were allegedly linked to a dozen companies that received close to Rs 4,000 crore from firms that received loans from Yes Bank. The companies allegedly linked to the family invested the money in properties in India and abroad, they said.
Claiming a “quid pro quo modus operandi”, an ED official said: “We are questioning Kapoor’s wife and daughter over the companies owned by them and their financial transactions. Rana Kapoor will be questioned in custody on his role in the entire affair.”
Documents filed by DOIT Ventures with the Registrar of Companies (RoC) show that the company has about 13 wholly owned subsidiaries. All of them have Kapoor’s family members as directors but no employees.
“We are in the process of identifying properties purchased by the family’s companies in India. Two properties in UK have also been identified. All of these will be ascertained as proceeds of crime in due course and attached,” the official said.
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