Yes Bank case: ED raids 5 premises of Cox and Kings, claims firm defaulted on ₹3,642-crore payment

The Enforcement Directorate (ED) on Monday raided five premises belonging to senior management of global tours and travel company Cox and Kings Group (CKG), in connection with the Yes Bank money laundering probe. The agency has claimed that the firm defaulted on loan payments worth ₹3,642 crore.

HT tried to contact CKG for their response over ED’s allegations, but till the time of going to the press, the firm did not respond to calls and messages.

On March 8, ED arrested Yes Bank’s founder Rana Kapoor, who is currently in judicial custody. The agency has been scanning the transactions made by the bank to its borrowers.

“During investigation, irregularities were also noticed in relation to the loan sanctioned to CKG. The Group had created multiple layer of onshore and offshore subsidiary across the globe through which the monies were siphoned off,” ED said in a statement on Monday afternoon.

The travel company was sent to bankruptcy court last year in October, after it defaulted on payments to the bank.

“Malvern Travel Limited, UK [United Kingdom] (an entity of CKG) was having outstanding of ₹493 crore which submitted the forged bank statement of RBS [Royal Bank of Scotland] Bank, UK; State Bank of India, UK, and forged end-use certificates of BDO LLP ( statuary auditor of the UK-based entity) to avail the said loan from Yes Bank. This forgery was pointed out by KPMG which is the administrator of this UK-based entity,” the statement added.

The agency has alleged falsification of records. “In relation to Cox & Kings Limited (CKL), the company forged its consolidated financials by forging the balance sheets of the overseas subsidiaries. The same was informed to BSE [Bombay Stock Exchange]/NSE [National Stock Exchange] by the resolution professional in writing. The statutory auditor of the Prometheon Enterprise Limited, UK (PEL – a subsidiary of CKG) was Raffingers UK LLP and the financials of PEL were sent to India by fictitious domain name impersonating the current officials of Raffingers UK LLP. For this, Raffingers UK LLP filed a criminal complaint to the National Crime Agency, UK,” it added.

After CKL’s default came into light, the lenders appointed PricewaterhouseCoopers (PwC) for forensic audit but the accused firm’s management did not cooperate, the ED alleged. However, based on the limited data available with them, PWC – which conducted the audit – confirmed the falsification of accounts, overstating of the sales figures and understating of the debt figures and fictitious transactions. PWC reported that from financial year 2015 to 2019, ₹3,908 crore were made to 15 fictitious customers, ED stated.

“Majority of collection shown in ledgers from Ezeego (another group entity) was not found in the bank statements. Another 147 sets of customers are also suspicious and not existent, as per PWC report. As per the report, CKL diverted ₹1,100 crore to Alok Industries Ltd without any approval of board,” ED’s statement said.

According to the agency, CKG sold Holiday Break Education Limited (HBEL), UK, a subsidiary of CKG, for ₹4,387 crore and instead of discharging the liability of bank, the entity siphoned off majority of the money, from which US$15.34 million was transferred to Kuber Investment Mauritius Pvt Ltd, which was controlled by one of the members of the senior management, whose premise was raided by ED on Monday.

From Ezeego, ₹150 crore were diverted to Redkite Capital Private Limited which was promoted by two other members of the management. This fund diverted to Redkite was used to buy the controlling stake in Tourism Finance Corporation Of India Ltd, a listed non-banking financial company (NBFC).