Rana Kapoor, co-founder of YES Bank, sanctioned loans worth Rs30,000 crore, of which those worth Rs 20,000 crore have turned into non-performing assets (NPA) and need to be probed, the Enforcement Directorate (ED) told the special Prevention of Money Laundering Act (PMLA) court on Wednesday, seeking his custody. The court has granted ED Kapoor’s custody till March 16.
ED counsel Sunil Gonsalves told the court that Kapoor and his family are linked to 78 companies, which the agency is scanning. He said the agency was checking if the Rs 20,000 crore was diverted to the 78 companies linked to Kapoor and his family and if there was quid pro quo.
The special judge, however, sought documents from the agency to support their claim, to which the agency produced records of forensic audit of the bank.
Kapoor’s lawyer Satish Manashinde objected to the plea, saying when Kapoor left the bank, the NPA account was only 1% of the total loan. He alleged that Kapoor has been made scapegoat. The defence raised questions on searches conducted by the ED at Kapoor’s house much before the case was registered. Manashinde argued that when the ED conducted the searches, the CBI had not registered a case. “Predicate offense was registered much later by the CBI and before that ED began probe and case of ED was registered,” the lawyer contended.
As per law, the ED can begin a probe only after a predicate offence is registered by other agency for financial fraud.
The ED countered the issue and claimed the searches were conducted in respect of case of money laundering against DHFL. The agency said they found material related to money laundering by Kapoor during the searches and hence a separate case was registered later.
Manashinde further contended that when Kapoor left the bank, its condition was much better, but the management which subsequently took over failed. “I can’t be held responsible for the failure of the present management,” Manashinde argued.
Manashinde denied the allegations that Kapoor received kickbacks for giving loans. He added that no bribe was taken. He was highest paid banker and received almost Rs50 crore a year from the bank since 2004 till recently, Manashinde argued, adding he had received awards from various institutions as the best banker. The defence further argued that there cannot be allegations of money laundering in the transactions of bank with DHFL, as the money taken was much prior to the said transaction.
Kapoor’s lawyer argued, “For four months, he was in London and was paying off debts. He was also in talks with the RBI to take over the bank and was meeting with government officers. A week later, a case was registered.”
The agency claimed that Yes Bank bought debentures worth Rs 3,700 crore of DHFL. In lieu for it, DHFL sanctioned a Rs 600-crore loan to Doit Urban Ventures Pvt Ltd, a company in which Kapoor’s daughters are directors. The loan was given without adequate collateral.
The defence said that all the three daughters have given security and they are capable of returning the loan amount of Rs 600 crore and it was never in the form of kickbacks. He also said there are documents to show how the said money is utilised.
The Enforcement Directorate (ED), meanwhile, will question key management persons of Yes Bank over the alleged irregularities. “They have to be confronted with the accused. The documents are voluminous and need to be checked,” the agency’s counsel told court. “Under the guise of these loans, funds have been siphoned off. We need to find how the amount travelled,” Gonsalves said.
