The Enforcement Directorate (ED) today conducted search at five premises of promoters and top management of Cox & Kings Group in Mumbai in the Yes Bank fraud case under the provisions of Prevention of Money Laundering Act (PMLA), 2002.
The searches were conducted at the premises of promoter Ajay Ajit Peter Kerkar, Director Pesi Patel, CFOs Abhishek Goenka and Anil Khandelwal, and auditor Naresh Jain.
The ED investigation has found large-scale irregularities in sanctioning of loans to Cox & Kings group by Yes Bank. The investigation found that the company had created multiple layer of onshore and offshore subsidiary across the globe through which the money was siphoned off. Five subsidiaries of CKG together availed Rs 3,642 crore from Yes Bank. A formal complaint in this regard was filed on 18 March 2020 by Yes Bank before.
Investigation revealed irregularities and forgeries were allegedly being committed by the CKG management at different levels for availing loan and then siphoning off the money. For example, Cox & Kings Limited (CKL) allegedly forged its consolidated financials by forging the balance sheets of the overseas subsidiaries.
The financial of Prometheon Enterprise Limited, the UK-based subsidiary of CKG, for example, would be allegedly sent to India through fictitious domain name impersonating the current officials of Raffingers UK LLP, its statutory auditor.
Malvern Travel Limited, UK, an entity of CKG, availed a loan of Rs 493 crores from Yes Bank on the basis of forged bank statements of RBS Bank, UK, State Bank of India, UK and forged end use certificates of BDO LLP, the statuary Auditor of the UK-based Entity. This forgery was pointed out by KPMG, which is the administrator of the UK-based entity.
After Cox & King Limited defaulted, the lenders appointed PwC for forensic audit but the management allegedly 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. PWC reported that from 2014-15 to 2018-19, sales of Rs 3,908 crores were made to 15 non-existent/fictitious customers. Majority of collection shown in ledgers from Ezeego, another group entity, was not found in the bank statements. Another 147 customers are also suspicious and non-existent.
The PwC report also revealed that Anil Khandelwal, former CFO of CKL, allegedly diverted Rs 1100 Crore to Alok Industries Ltd without any approval from the board.
CKG sold Holiday Break Education Limited, UK, a subsidiary of CKG, for Rs 4,387 crores and instead of discharging the liability of bank, allegedly siphoned off majority of the money. A part of this money, $15.34 million, was then transferred to Kuber Investment Mauritius Pvt Ltd, which was controlled by promoter Peter Kerker.
From Ezeego, Rs 150 crore was allegedly diverted to Redkite Capital Private Limited, which was promoted by Anil Khandelwal, the then CFO of CKL and Naresh Jain (Internal Auditor of CKL). The fund diverted to Redkite was used to buy controlling stake in Tourism Finance Corporation Of India Ltd, a listed NBFC.