ED Expands Yes Bank Probe Beyond DHFL Loans, Rana Kapoor’s Foreign Assets Under Scanner

The Enforcement Directorate has expanded its scrutiny of Yes Bank Ltd. to include large corporate loans given out by the lender and foreign assets of Rana Kapoor.

The investigating agency had on Sunday arrested the co-founder of the private sector lender on charges of money laundering and for receiving Rs 600 crore bribe from Dewan Housing Finance Corporation Ltd.

It is now looking at Yes Bank’s books to find out if kickbacks were received by the Kapoor family and others from corporates in lieu of non-initiation of loan recovery processes.

Sources said Yes Bank CEO Ravneet Gill was questioned by ED at its office in Mumbai on Monday. The investigators have also zeroed in on Kapoor's purported foreign assets in the U.K., France and the U.S. to see if funds accrued by money laundering were used to purchase these properties.

A dozen alleged shell companies, Kapoor family investments of Rs 2,000 crore and over Rs 4,500-crore worth of transactions are under ED’s scanner. The agency has also found 44 costly paintings, one of which was purchased by Kapoor from Congress leader Priyanka Gandhi Vadra.

While the Congress has said that the deal was transparent as payment of Rs 2 crore was received by Vadra from Kapoor through cheque and was reflected in income tax returns, the ED is probing if the painting was owned by her or the All India Congress Committee. It is also investigating if the provenance certificate (signed by an artist to state his genuine work) was signed by Vadra and under what circumstances.

Sources claimed that this Rs 2 crore was used by Vadra to purchase a property in Himachal Pradesh.

The painting, a portrait of former Prime Minister Rajiv Gandhi by Maqbool Fida Husain, was gifted to Gandhi during the AICC centenary celebrations in 1985.

The Congress has rejected the charge as fake, saying there was no illegality in the transaction as the party general secretary had received the money (Rs 2 crore) in cheque and mentioned it in her income tax filings for 2010.

ED brought the painting to its Mumbai office on Monday and is expected that Kapoor will be asked to identify it.

Kapoor and his wife are also expected to be confronted by ED with DHFL promoter Kapil Wadhawan, arrested by ED in the Iqbal Mirchi PMLA case and is out on bail at present. A big housing finance company and a financial insurance firm are also under the scanner of the ED for their dealings with Kapoor and Yes Bank.

A particular instance of a popular power generation company taking Rs 500 crore loan from the bank and it later turning into a non-performing asset is also being probed by the Enforcement Directorate.

Sources claimed that the promoter of the firm later sold his prime property at Amrita Shergill Marg in Delhi to Kapoor's wife for about Rs 350 crore and this money was sourced from the housing finance company in a "multi-layered" dubious transaction.

This is a case of quid pro quo so that no coercive action is taken by the bank to recover the loan given to the power generation company and this instance is now being probed, they said.

Two more pricey immovable properties at Kautilya Marg and SP Marg in the national capital, alleged to be in control of the Kapoors, are being probed by the agency for being "proceeds of crime". The estimated book value of these three assets is stated to be Rs 1,000 crore.

The Enforcement Directorate has said that this case against Kapoor involves proceeds of crime to the tune of Rs 4,300 crore.

The 62-year-old former CEO and MD of the bank was arrested on Sunday and is in ED custody till March 11. Sources said that the Income Tax Department is also set to initiate action against Kapoor and others for tax evasion and possession of alleged undeclared foreign assets.