The Enforcement Directorate (ED) arrested crisis-hit YES Bank Ltd’s founder Rana Kapoor on charges of money laundering on Sunday and a court in Mumbai sent him to police custody till March 11.
In mounting trouble for the 62-year-old private banker, the Central Bureau of Investigation (CBI), too, was probing Kapoor and his family for alleged criminal conspiracy, cheating and corruption.
On Saturday evening, CBI filed a case against Kapoor, Doit Urban Ventures Pvt Ltd (a company linked to his family), Dewan Housing Finance Corporation Limited (DHFL) and DHFL’s Kapil Wadhawan. HT first reported on Sunday that CBI, too, was moving to probe Kapoor.
According to ED’s remand papers accessed by Hindustan Times, Kapoor is suspected to be involved in the laundering of Rs 4,300 crore. He allegedly received a kickback of Rs 600 crore from DHFL and needs to be questioned about the “nefarious” deals, the agency said.
Around 4am on Sunday, ED, which probes financial crimes, arrested Kapoor after questioning him for about 20 hours at his residence and at the agency’s office.
Searches were conducted at his and his daughters’ residences in Delhi and Mumbai.
In the Mumbai court, where Kapoor was produced later in the day, ED also said the banker was arrested for not cooperating with the probe — a charge that he and his lawyers denied.
The agency alleged that Yes Bank bought Rs 3,700 crore worth debentures of DHFL, which granted a Rs 600 crore loan to Doit, a company in which Kapoor’s three daughters are directors. ED counsel Sunil Gonsalves said the agency believes the loan to Doit was a kickback for Yes Bank subscribing to the debentures of DHFL.
“DHFL’s Kapil Wadhawan (chairman and MD) and Kapoor entered into a criminal conspiracy to defraud public money,” Gonsalves said. “It appears that there is criminal conspiracy between DHFL and Kapoor to receive loans and the money laundered by Kapoor has been used for personal purpose.”
Kapoor, who was present in the courtroom, rejected allegations by ED that he was not cooperating and informed the court that he extended all help when ED searched his residence. The banker and his lawyers said the debentures were AAA rated and Doit is servicing the debt on time.
“An interest of Rs 130 crore has been paid on loan taken by my daughters’ company. There has been no delay in the payments to DHFL,” Kapoor said.
Advocates Yusuf Iqbal and Zain Shroff, who appeared for the banker, said: “Kapoor is having serious cardiac issues and the medical reports are being submitted as proof. He needs to sleep and will apply for bail as early as tomorrow. He is under psychiatric treatment.”
The advocates also sought the dismissal of the remand application, but the request was turned down by the court.
The ED remand paper said it is suspected that “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”.
“Rana Kapoor obtained undue pecuniary advantage from DHFL in the matter of investment in the debentures of DHFL by Yes Bank, through the companies held by his wife and daughters,” the documents said.
The agency alleged that in April-June 2018 Yes Bank invested in the short-term debentures, and Wadhawan paid the kickback of Rs 600 crore to Kapoor and his family members in the garb of a loan to Doit.
“Furthermore, it was found that daughters of Rana Kapoor — Roshni Kapoor, Radha Kapoor Khanna and Rakhee Kapoor Tandon — are 100% shareholders of DOIT through Morgan Credits Pvt Ltd. The loan of Rs 600 crores was given on the basis of mortgage of substandard properties having very meagre value and by considering its future conversion from agriculture land to residential land,” ED alleges.
In addition, the ED remand paper says, a loan of Rs 750 crore was sanctioned by Yes Bank to RKW Developers Pvt Ltd, a DHFL group company, and the whole amount was siphoned by Wadhawan.
On Thursday, the Reserve Bank of India took control of Yes Bank and said it would work on a revival plan. Two days later, the State Bank of India (SBI) said it would invest funds to buy a 49% stake in Yes Bank as part of the initial phase of a rescue deal for the troubled lender.
In November, the central bank superseded the board of troubled mortgage lender, DHFL, citing governance concerns and defaults. Wadhawan was arrested by ED in January and is currently out on bail. His lawyer could not be contacted for comments.
