The sessions court in Mumbai on Monday extended the custody of Rana Kapoor, former managing director and chief executive officer of crisis-hit YES Bank, till March 20.
The Enforcement Directorate (ED) had asked for six days of custody on the grounds that Kapoor is guilty of the offence of money laundering and further interrogation is required to get to the bottom of the deals he allegedly made through a complex web of companies. The court, however, granted custody for four days.
During investigations, the probe agency found that a loan of Rs 202 crore was sanctioned to Mack Star Marketing, which is a joint venture between HDIL promoters Sarang Wadhawan, Rakesh Wadhawan, and former Punjab and Maharashtra Co-operative Bank chairman Waryam Singh and De Shaw group. The first three hold only 16.64 per cent shares in the entity, while the De Shaw group has the majority stake.
The ED found that the loan sanctioned to Mack Star Marketing was used by HDIL to pay off its previous loans. However, the loan was sanctioned to the entity with the specific purpose of renovating its office building. The investigative agency in the court alleged that the property was constructed two years prior to the loan sanctioned for its renovation and was valued at Rs 100 crore. Also, ED has alleged that the loan was taken without the approval of the majority shareholders of the joint venture.
The investigative agency has also alleged that Kapoor had a strong relationship with HDIL promoters and sanctioned the loan to Mack Star without the knowledge or approval of De Shaw group, the majority shareholders in the JV.
In March 2016, the De Shaw group had written to YES Bank saying the loans extended by the bank were ultra vires since it hadn’t approved the loans. Moreover, a commercial suit was filed by the director of the JV in the Bombay High Court detailing each of the illegal acts of Kapoor in connivance with the Wadhawans.
The investigations have revealed that Kapoor obtained illegal gratification in the form of property in New Delhi, which belonged to Gautam Thapar, promoter of Avantha group. Avantha owed Rs 350 crore to ICICI Bank and Rs 30 crore to DCB Bank against charge on the property. In March 2016, Kapoor sanctioned a Rs 400-crore loan from the bank to Avantha Realty as lease rental discounting for a period of 10 years. Two days prior to sanctioning the loan, Avantha Realty entered into a lease rental agreement with BILT Graphics Paper, another group company. However, no rent was paid by BILT to Avantha, and the ED has alleged that the agreement had been entered into to defraud YES Bank. Avantha paid off dues to ICICI Bank and DCB Bank, after which the charge of the said property was created in favour of YES Bank. The said property was valued at Rs 550 crore in 2016 by ICICI Bank valuation report.
The property was later bought by Bliss Abode at a price of Rs 378 crore where Rana’s wife Bindu Kapoor was a director and the bank’s management committee headed by Rana Kapoor readily agreed for its sale. The ED has alleged that though the offer letter for purchase of property by Bliss was made in August 2017 and the property was purchased in September 2017, Bliss had already obtained a loan of Rs 90 crore from Indiabulls Housing Finance in July 2017 against the charge of the same property and Rana Kapoor was a co-borrower in the loan.
Kapoor’s lawyer responded that his client was being singled out and said the bank’s bad loans were 1.25 per cent of the advances when Kapoor was CEO, and all the corporates named by the Finance Minister – Anil Ambani group companies, IL&FS, Essel group companies, and Dewan Housing Finance – turned bad after Kapoor left.
Kapoor’s lawyer also said the bank’s credit committee took the decisions on loan disbursals and only he cannot be singled out. Also, on the allegations that he obtained illegal property, Kapoor’s lawyer said he took upon liabilities personally and paid it off to the bank by taking a loan from Indiabulls Housing Finance.
Investigations also revealed that about 78 companies owned by Kapoor’s family members were being controlled and managed by Kapoor. The ED said: “Documents related to these companies/firms are to be obtained.” It added that Kapoor would be confronted to ascertain siphoning off of funds from YES Bank to these companies. The ED had named Kapoor, his wife Bindu and three daughters — Roshini, Radha and Raakhe — as accused in the matter.