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Rana Kapoor used three family-owned companies to divert funds: ED

The allegedly diverted sum of Rs 5,050 crore is “proceeds of crime,” according to ED, which is probing money-laundering charges against Kapoor and his family members.

, ET Bureau|
Last Updated: May 27, 2020, 08.25 AM IST
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MUMBAI: Morgan Credit Pvt Ltd (MCPL), RAB Enterprises India Pvt Ltd and Yes Capital Pvt Ltd (YCPL) and over 100 subsidiaries were used by Yes Bank cofounder Rana Kapoor and his family members to allegedly divert Rs 5,050 crore, as per a prosecution complaint, equivalent to chargesheet, filed by the Enforcement Directorate (ED).

The allegedly diverted sum of Rs 5,050 crore is “proceeds of crime,” according to ED, which is probing money-laundering charges against Kapoor and his family members.

Kapoor and his wife, Bindu, gifted the ownership of MCPL and YCPL to their three daughters, each holding 33.33%. RAB Enterprises (India) was owned by his wife and established with an objective for pursuing investment in family household companies/ selective financial investments. Kapoor has allegedly told ED that these are family group companies.

Describing Kapoor as the “prima donna,” chief conspirator and architect of the alleged scam, ED in its chargesheet said, “... Rana Kapoor with an intent to create an elaborate ecosystem for diversion and laundering of funds, had created multiple entities in India and abroad. These companies were acting as a vehicle of money laundering and placement of funds and the family members and close associates were put in as directors in these firms.” “Many of these companies are non-operative and used for siphoning of illegally obtained money, ie proceeds of crime, by Rana Kapoor who appointed dummy directors on board of many of these companies,” it said.

ED said the private lender had assumed a very high exposure ( relative to its networth) in many entities which were facing stress and illiquidity. “Kapoor perpetrated the scam by firstly taking money out of Yes Bank under the garb of debentures and loans, by abusing his position at the bank and secondly receiving kickbacks and gratification for the same,” the chargesheet claims.

Morgan Credit
The chargesheet said, “MCPL is a promoter company of Yes Bank. A few years ago, it diversified into sunrise business segments by establishing four 100% owned subholding subsidiaries. MCPL has equity capital of Rs 2 lakh, it is original shareholder of Yes Bank Ltd and was holding 7.02 crore shares of Yes Bank, source of funding were largely dividends received by it from Yes Bank and borrowings.”

Subsidiaries created include Doit Retail Brands (India) Pvt Ltd — in the business of master franchisee for global brands — Dry cleaning and Laundry Pvt Ltd, DICE Acceleration & Edutech Services (India) Pvt Ltd — operating a design school in tie-up with Parson Institute of Design, New York — among others.

Yes Capital
The probe has revealed YCPL is one of the “promoters companies of Yes Bank” and diversified into new business by establishing a 100% subholding subsidiary, Art Capital (India) Pvt Ltd. “...YCPL is owned by his (Kpoor’s) three daughters in equal proportion, and the objective of YCPL is solely to invest into its group companies,” the chargesheet states.

RAB Enterprises
The chargesheet said RAB is mainly an investment company. “Funding for share capital amounting to Rs 87 crore was from tax-free dividend income from Kapoor’s personal shareholding in shares of Yes Bank Ltd, which he gave to his wife. Under RAB, there are around 10 property owning companies, with an aggregate loan of Rs 2,550 crore from Indiabulls against mortgage of properties as security held by these 10,” it noted. The company also purchased MF Hussain’s painting of Rajiv Gandhi.

The agency said the daughters were “hand in glove” with their father, who allegedly used accounts of their companies for laundering of proceeds of crime and siphoning them through multiple subsidiary accounts that were projected as untainted. In their statement to ED, the daughters revealed that their father managed the affairs of their companies.
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