YES Bank crisis: Rana Kapoor in ED custody, faces Rs 4K-cr kickback probe

12 shell firms, 2 UK assets, 44 paintings under ED scanner; London-bound daughter stopped at Mumbai Airport; CBI books Kapoor and Wadhawan on charges of cheating.

YES Bank Crisis : The Enforcement Directorate (ED) has found that YES Bank co-founder Rana Kapoor and his family set up over a dozen shell firms that were allegedly used for receiving kickbacks to the tune of Rs 4,300 crore and invested in properties illegally.

The agency arrested Kapoor, 62, early Sunday morning in connection with a money-laundering probe — three days after the Reserve Bank put YES Bank under a 30-day moratorium and superseded its board. Kapoor was produced in a Mumbai sessions court, which remanded him in ED custody till March 11. The agency told the court that Kapoor’s custody was required to investigate the role of some companies run by his family members, and are directly and indirectly controlled by him.

“Kapoor obtained undue pecuniary advantage from DHFL (Dewan Housing Finance Corporation) in the matter of investments in the debenture of DHFL by YES Bank, through the companies held by his wife and daughters. It is also apprehended that Kapoor had misused his official position in several other transactions and obtained illegal kickbacks directly or indirectly through entities controlled by him and his family members,” the ED said in the remand to court, which was seen by the Business Standard.

“Prima facie, there appears to be generation and laundering of proceeds of crime to the tune of Rs 4,300 crore by the ‘accused’ persons under Prevention of Money Laundering Act (PMLA), 2002,” the ED said, adding further investigation into the money trail of the proceeds was under progress.

Sources said these firms used the kickback amounts to buy properties valued at Rs 2,000 crore. The current market value of the assets could be more than Rs 5,000 crore, said ED officials.

The agency is in possession of some crucial documents that show Kapoor bought two properties in the UK, and their valuation of which is underway. The probe agency also seized 44 paintings from Kapoor’s residence.

Roshini, Kapoor’s daughter, was stopped by immigration authorities from taking a Mumbai-London flight as a look-out-circular had been issued against Kapoor family members by the ED. The ED started its probe last Friday based on a first information report (FIR) filed by the Central Bureau of Investigation (CBI). The CBI in the FIR alleged Kapoor entered into a criminal conspiracy with DHFL promoters Kapil Wadhawan and others for extending financial assistance to DHFL by YES Bank in lieu of substantial undue benefits to himself and his family members through the companies held by them.

ED investigating role of PFI, NGO for funding protest against Article 370

The probe agency is likely to summon more people connected with these two organisations to find out the source of the funds.

Widening its probe, the Enforcement Directorate (ED) is examining the role of Kerala -based Popular Front of India (PFI) and Rehab India Foundation (RIF) for allegedly funding protests against the abrogation of Sections of Article 370.

Senior members of both organisations earlier were questioned in connection with their alleged link to Rs 120 crore used for the protests against the Citizenship (Amendment) Act (CAA) and the National Register of Citizens (NRC) across the country. While the PFI is an Islamic outfit, RIF is a non-profit organisation.

However, the ED’s inquiry in the ongoing matter raised suspicion over their involvement in several protests over 70 days since the government removed Jammu & Kashmir's (J&K's) special status.

Sources in the ED said the protests related to the J&K issue were stage-managed, especially in Delhi-NCR and some areas of Uttar Pradesh. Officials are trying to ascertain the quantum of funding that was mobilised allegedly to provoke protesters.

The probe agency is likely to summon more people connected with these two organisations to find out the source of the funds, and whether there was any support from anti-social elements. Early probe reveals that cash given to a protester was in the range of Rs 2,000-10,000 at the height of the stir against the J&K move.

On Wednesday, the PFI’s state president Mohammed Parvez Ahmed and RFI’s Shahid Abu Bakr appeared before the ED in Delhi.

A team of Delhi and UP police is working with the central agency to identify the people who deposited and withdrew Rs 1.04 crore cash between December 4 and January 6 from about 15 bank accounts of the PFI and RFI. There were as many as 80-90 withdrawals from a few bank accounts in a day, the sources said.

Business Standard

ED arrests DHFL's Kapil Wadhawan in Iqbal Mirchi money laundering case

At present, DHFL is undergoing proceedings under the insolvency law.

The Enforcement Directorate (ED) formally arrested Kapil Wadhawan (pictured), former chairman and managing director of debt-laden Dewan Housing Finance (DHFL), for his alleged role in financing a loan to gangster Iqbal Memon (alias Iqbal Mirchi), supposedly also used for funding terrorism.

Wadhawan was produced in court under the Prevention of Money Laundering Act and remanded to the ED's custody for two days.

Sources in the ED alleged he approved all payments to Mirchi. “He was looking after the finances at that point of time (in 2010) and had played a vital role in structuring the whole deal with Memon,” said an official.

ED is investigating a money laundering case against Memon, linking his several property deals in Mumbai — these are being treated as proceeds of crime. Three of these properties were reportedly sold to Sunblink Developers, a company connected with Kapil’s brother, Dheeraj Wadhawan.

An ED chargesheet filed last month in court had a series of details in this regard, naming the Wadhawans. The duo was said to have used DHFL to pay Memon, in the form of loans.

At present, DHFL is undergoing proceedings under the insolvency law.

The ED says after various meetings, Dheeraj Wadhawan entered into an agreement in March 2010 with Memon, where he agreed to acquire the development rights of the properties mentioned earlier. This was to be done through Sunblink, where Dheeraj's brother-in-law, Sunny Bhatija, was a director.

A deal was allegedly finalised for surrender of tenancy rights in favour of Sunblink for Rs 225 crore. The source of the amount paid in India towards the deal, Rs 111 crore, was arranged by DHFL and RKW Developers. An earlier loan was taken from DHFL in 2010, repaid by the loan taken from RKW at an annual interest rate of five to six per cent, went the chargesheet.

We do not have any relationship with Capstone Forex, says Edelweiss

Claims that Sanjay Shah is director at some group companies; no other link.

Edelweiss on Sunday said its group entities do not have any relationship with Capstone Forex, which is being probed by the Enforcement Directorate (ED) for an alleged multi-crore forex violation.

The firm also said Sanjay Nathalal Shah, independent director on some group firms, who is under scanner for alleged connection with Capstone, has no other relationship with the group.

Rashesh Shah, chairman and chief executive, Edelweiss Financial Services group, said all allegations of the Foreign Exchange Management Act (FEMA) violations were false.

“Sanjay Nathalal Shah has no other association with the Edelweiss group. Nor is he in any way related to me. Shah is a common name,” Shah added.

The regulators and agencies have an obligation to investigate. “If any information is sought from us, as a responsible corporate house, we will, of course, provide the same,” Edelweiss said in a statement.

Shah has been asked to appear on January 13. Shah was earlier called to join the investigation on January 9.

However, he is learnt to have sought some time due to personal engagements. The information about the case first surfaced after a whistle-blower wrote a letter to the government agencies.

Business Standard