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connection with a money-laundering probe — three days after the Reserve Bank put YES Bank under a 30-day moratorium and superseded its board.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.

No wish for laws treating businesses with suspicion: FM Nirmala Sitharaman

This, after Tata Sons chairman said that businesses need supervision and not suspicion.

Finance minister Nirmala Sitharaman has said the government had no wish for laws which treat every business entity with suspicion. This comes right after Tata Sons chairman N Chandrasekaran said business needs supervision but not suspicion. A sentiment the FM said she fully empathised which.

The government was working towards a desired environment in this regard and required business to work with it, she said.

Delivering the Nani Palkhivala Centenary Celebrations Lecture here, she said: “My first and earnest attempt, which continues till today, is to decriminalise everything to do with the Companies Law or related laws — the very point the Prime Minister keeps talking. And, I was very impressed, again when the Tata Group's head said the government should trust people, government should trust its own citizens.”

“In the law, there are a number of sections leading to a criminal approach and, therefore, penalties of even jail terms. The government's effort is to decriminalise the Companies Law, ensure no other Act of the government — whether it is on income tax or whether it is Prevention of Money Laundering Act — will have such an impact.”

“We do not want a law which is going to treat every business house with suspicion. That is not the intent of this government at all,” she said.

Chandrasekaran, in his Palkhivala Memorial lecture last week, said there was micro-management and suspicion (from the government’s side). All rules in the country start with suspicion, he said.

The FM said at the latest meeting of the GST Council, she suggested deliberation on whether rate revisions could be a once-a-year exercise. If the various committees say a rate reduction will lead towards inversion of the duty structure, we should have the largeness to refuse such a reduction.

Business Standard

Why Modi govt is amending Aadhaar Act and what it means for your privacy

Critics allege that with the new Bill, the Centre is looking to circumvent the Supreme Court order passed earlier this year.

The Narendra Modi government has introduced a Bill in parliament that propose amendments to various laws that underpin the Aadhaar ecosystem, in a move that comes after a Supreme Court verdict earlier this year curtailed the sprawling nature of India’s biometric authentication programme.

The Aadhaar And Other Laws (Amendment) Bill 2018, which was passed by the cabinet two weeks ago and introduced by information technology minister Ravi Shankar Prasad in the Lok Sabha on Wednesday, contains a host of amendments that have to be passed to comply with various aspects of the apex court’s judgements.

These include: provisions to help make the biometric scheme voluntary, clauses that will allow the Unique Identification Authority of India (UIDAI) to more effectively police its ecosystem and options to cancel Aadhaar numbers when one turns 18.

The most controversial change, however, are two proposed amendments to the Telegraph Act and the Prevention of Money Laundering Act. The amendments will allow banks and telecom operators to continue using voluntary Aadhaar authentication as a means of linking Aadhaar numbers to bank accounts and mobile SIM cards.

Critics and privacy advocates say that these two amendments specifically are in contravention of the Supreme Court judgement.

ALSO READ: Aadhaar Act amended to bar private entities from storing individuals' data

“The Supreme Court…. explicitly prohibited use of Aadhaar by private parties by declaring Section 57 of the Aadhaar Act, 2016, as unconstitutional. This section provided grounds for Aadhaar-based authentication by private entities as well,” a statement by Rethink Aadhaar, a non-partisan campaign that is critical of the UID project, said on Tuesday.

“The present bill proposes amendments to the Aadhaar Act, Telegraph Act and the Prevention of Money Laundering Act which will circumvent the SC judgment, and allow the continued use of Aadhaar-based e-KYC authentication by private entities for mobile and banking services, respectively,” it added.

When Prasad introduced the Bill in the Lok Sabha on Tuesday, it drew sharp criticism from opposition party members.

Congress MP Shashi Tharoor said that it would enable “private organisations to get Aadhaar details which is in violation of the Supreme Court judgement” and that it failed to protect the right to privacy.

Business Standard