Investigations by the Enforcement Directorate into the business dealings of former Yes Bank CEO, Rana Kapoor and family has brought to light a web of questionable transactions hinging on hundreds of bank accounts, investment companies.
The ED investigations show that the family held as many as 168 bank accounts and 101 investment companies which led to Kapoor starting as a professional banker and becoming one of India's most high profile promoters with a lavish lifestyle. Kapoor is in jail facing multiple charges of financial wrongdoing.
Fond of a flamboyant lifestyle, Kapoor was a tenant of a palatial duplex owned by BJP leader Jyodiraditya Scindia in the Samudra Mahal complex in Worli in Mumbai. This was the address where parties were thrown by Kapoor regularly.
Kapoor and family had as many as 101 investments configured through three holding firms -- Morgan Credits (MCPL), Yes Capital India (YCPL) and RAB Enterprises, according to the ED.
Rana Kapoor, wife Bindu and their daughters Roshni, Radha and Rakhee Kapoor held a total of 168 bank accounts in different banks.
The family holding companies invested across 15 mutual funds and owned a collection of 59 paintings worth Rs 4 crore. There was a separate room at Samudra Mahal to keep these paintings. Among others, the paintings include a portrait of the late Rajiv Gandhi by celebrated artist M.F. Hussain.
According to ED investigations, the Kapoor family first began these investment companies from 1991. That was the year MCPL was formed.
YCPL, previously named DoIT Capital, was incorporated in May 2003. Later that year—Yes Bank was formed in 2004 -- both these companies were approved by Reserve Bank of India (RBI) as investment companies.
The main source of investment in Yes Bank was the funds Kapoor received from the sale of shares to Rabo Bank Holland in the joint venture company, Rabo India Finance.
In 2002-03, Rana Kapoor and partners Ashok Kapur and Harkirat Singh exited selling the stake to Rabo Bank. In 2004, Kapur and Kapoor launched Yes Bank.
The investigative agencies are also probing the transactions between Kappor family and the Wadhawans of DHFL.
DHFL is facing insolvency proceedings and owes creditors around Rs 36,000 crore.
The Central Bureau of Investigation (CBI) has said investigations by its economic offence wing into alleged deals worth Rs 5,050 crore found the Kapoor family received kickbacks in exchange for giving Yes Bank loans to the Wadhawans of DHFL through various channels and in gross violation of rules.
Kapoor is said to have used investment companies to get undue benefits from the Wadhawans after influencing Yes Bank to extend large loans to DHFL and other Wadhawan companies by flouting rules, according to the CBI.
According to ED officials, in April 2018, Yes Bank gave a loan of Rs 3,700 crore in short-term debentures to Wadhawan's DHFL. This money has not come back to Yes Bank yet.
Yes Bank also sanctioned a loan of Rs 750 crore to one of the companies, Belief Realty (BRPL), owned by DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan and their family members.
This funding is said to have been siphoned off by Kapil Wadhawan and Dheeraj Wadhawan through their shell companies.
The entire amount was transferred to DHFL without making any investment in Bandra Reclamation Project for which the loan had been originally sanctioned, according to ED officials.
A red flag had been raised by the loan risk team of Yes Bank which had pointed out multiple and serious issues in the proposal. This included the fact that a majority of the project approvals were not in place. Also, the Letter of Intent (Lol) issued by SRA was for a carpet area of 1.3 lakh square feet whereas the proposal from BRPL had considered an area of 6.3 lakh square feet.
Even after these warnings, the formal approval was given, no external rating o due diligence was called for on the BRPL. Immediately after disbursement of loan, the internal rating of the transaction was downgraded.
The standard process stipulated by the Yes Bank's risk management processes for valuation was waived and no end-use certificate was called for from BRPL. The loan was sanctioned at the insistence of Kapoor, officials have alleged.
"All along, Rana Kapoor knew that the Rs 750 crore sanctioned to Belief Realtors for its Bandra reclamation project was not going to be used for the declared purpose," the ED has alleged.
The investigators said this deal was to siphon off the money from Yes Bank. The Rs 750 crore was sanctioned to the Wadhawan company without a penny being spent for the stated use.
The other allegation is that the Wadhawans paid a kickback of Rs 600 crore to Rana Kapoor and family under the guise of loan of the same loan from DHFL, according to the ED.
This was given by DHFL to DoIT Urban Ventures, one of the investment companies owned by the family of Rana Kapoor. Kapoor's daughters are 100 percent shareholders in DoIT through MCPL.
The Rs 600-crore loan was given by DHFL to DoIT on the basis of mortgage of sub-standard properties including 7.79 acres of land at Alibaug and 91.63 acres at Raigad. These land parcels has low value and loan was valuated considering its future conversion from agriculture land to residential land. Besides, Radha Kapoor gave a personal guarantee showing a net worth of Rs 1,386 crore, according to ED documents.
Of the Rs 600 crore, DoIT used Rs 300 crore for repayment of an earlier loan. The remaining, the company said, is for general corporate purpose.
Against this loan, five properties were given as collateral to DHFL. At the Wadhawans' instruction, DHFL valued these properties at future value on becoming commercial land.
At the time of giving loan, the purchase value of this land was only Rs 39.66 crore while the valuation done by DHFL was Rs 735 crore. This plot remains an agricultural land, according to ED documents.
The ED investigation said Rajendra Mirashie, president (project finance) of DHFL did not interact at all with the three daughters of Kapoor, the owners of DUVPL. Marishie used to coordinate with Lata Dave, senior executive secretary of Rana Kapoor. Kapoor often talked to the Wadhawans directly and sometimes, with S Govindan, their executive assistant.
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