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New Delhi: The Enforcement Directorate (ED) Monday conducted searches on the premises of the promoter, directors, CFO and auditor of the Cox & Kings Group (CKG) in Mumbai, which is allegedly involved in the Rs 3,642-crore Yes Bank fraud case.

Cox & Kings, the ED alleged, had created multiple layers of onshore and offshore subsidiaries across the globe, through which it siphoned off money.

The ED also alleged that the company forged its consolidated financials by falsifying the balance sheets of the overseas subsidiaries to get loans.

A formal complaint in this regard was filed on 18 March by Yes Bank, and during investigation irregularities were noticed in relation to the loan sanctioned to Cox & Kings Group.

The ED said in a statement that it searched premises of Ajay Ajit Peter, Pesi Patel, Abhishek Goenka, Anil Khandelwal and Naresh Jain, promoter/directors/CFO/auditor of Cox & Kings Group in Mumbai in Yes Bank fraud case of Rs 3642 crores under the provisions of Prevention of Money Laundering Act.

According to the ED, Cox & Kings Ltd (CKL), India, had an outstanding loan of Rs 563 crore, while Ezeego One Travel and Tours Ltd (EOTTL), India, had an outstanding of Rs 1,012 crore. Moreover, Cox & Kings Financial Services Ltd (CKFSL), India, had an outstanding loan of Rs 422 crore, Prometheon Enterprise Limited, UK, had an outstanding of Rs 1,152 crore and Malvern Travel Ltd, UK, of Rs 493 crore.

Also read: In Yes Bank crisis, you cant miss the ugly realities of Indias private sector lenders

According to the ED, Malvern Travel Limited, UK, an entity of CKG, had an outstanding of Rs 493 crore, which submitted the forged bank statement of RBS Bank, UK, State Bank of India, UK, and forged end-use certificates of BDO LLP (Statutory Auditor of the UK-based Entity) to avail the loan from Yes Bank.

According to the ED, this forgery was pointed out by KPMG, the administrator of this UK-based entity. It said the Bombay Stock Exchange and the National Stock Exchange were informed about this in writing.

The statutory auditor of the Prometheon Enterprise Limited, UK (PEL- a subsidiary of CKG) was Raffingers UK LLP, and the financials of PEL were sent to India by fictitious domain name impersonating the current officials of Raffingers UK LLP. For this, Raffingers UK LLP filed a criminal complaint to the National Crime Agency, UK, an ED official said.

According to the ED, after CKL defaulted on the loan, the lenders appointed PricewaterhouseCoopers for forensic audit, but the management did not cooperate.

However, based on the limited data available with them, PWC confirmed falsification of accounts, overstating the sales figures and understating the debt figures, fictitious transactions etc, a senior ED official said.

PWC reported that from FY15 to FY19, sales of Rs 3,908 crores were made to 15 non-existent, fictitious customers. Majority of collection shown in ledgers from Ezeego were not found in the bank statements, the senior official added.

According to the ED, the PWC report found another 147 sets of customers to be suspicious and non-existent.

Anil Khandelwal, CFO of CKL, diverted Rs 1,100 crore to Alok Industries Ltd without any approval of the board, the officer said.

The ED further claimed that CKG sold Holiday Break Education Limited, UK, another subsidiary for Rs 4,387 crore, and instead of discharging the liability of the bank, it siphoned off the majority of the money.

From this siphoning, USD 15.34 million was transferred to Kuber Investment Mauritius Pvt Ltd, which was controlled by Peter Kerker, the senior ED officer said.

From Ezeego, Rs 150 crore was diverted to Redkite Capital Private Limited, which was promoted by Khandelwal and Naresh Jain, internal auditor of CKL. This fund diverted to Redkite was used to buy a controlling stake in Tourism Finance Corporation Of India Ltd, a listed non-banking financial company, the officer added.

Also read: Yes Bank rescue is like Hotel California You can enter but cant exit

The ED registered a money laundering case against Yes Bank founder Rana Kapoor and others on 7 March on the basis of an FIR registered by the CBI.

In the FIR, it was alleged that between April and June 2018, Yes Bank had invested Rs 3,700 crore in the short-term debentures of Dewan Housing Finance Corporation Ltd (DHFL).

Simultaneously, Kapil Wadhawan, MD of DHFL, allegedly paid a kickback of Rs 600 crores to Rana Kapoor and his family members in the garb of loan given by DHFL to DOIT Urban Ventures (India) Pvt Ltd, also a Rana Kapoor Group Company.

In addition, the FIR said, Yes Bank Ltd also sanctioned a loan of Rs 750 crore to RKW Developers Group, which is beneficially owned by Kapil Wadhawan, Dheeraj Wadhawan and their family members. This loan was allegedly siphoned off by Wadhawans through their shell companies and it was never used for the declared purpose.

Investigation conducted under PMLA revealed the role of Rana Kapoor in money laundering and he, therefore, was arrested by the ED on 8 March, the ED said.

Also read: Moral of Yes Bank collapse story: Money makes you do things you dont want to

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Cox & Kings created layers of onshore and offshore subsidiaries to siphon off money: ED - ThePrint