Booked for corruption, Yes Bank's founder Rana Kapoor breaks down
What's the story
Rana Kapoor, the founder of crisis-hit Yes Bank, was on Sunday booked by the Central Bureau of Investigation (CBI) for alleged criminal conspiracy, cheating, and corruption. He is already under investigation by the Enforcement Directorate (ED), that arrested him yesterday morning after hours of interrogation. Raids were conducted at his and his daughters' residences too. He will remain in ED custody till Wednesday.
Context
RBI took charge of Yes Bank, customers remained worried
On Thursday, the Reserve Bank of India (RBI) announced it has taken over Yes Bank as the lender failed to raise capital. RBI also informed that customers will be able to withdraw only Rs. 50,000 till April 3, from all their accounts. After the bank was put under a moratorium, State Bank of India (SBI) said it could buy 49% stakes to rescue it.
Allegations
After hours of questioning, ED arrested Kapoor yesterday
Kapoor, who failed to rescue the bank he founded, was grilled by ED after RBI's decision. Over a span of 36 hours, the agency asked the 62-year-old about the kickbacks he allegedly received. ED claims he is involved in the laundering of Rs. 4,300 crore. It is alleged that Kapoor received a kickback of Rs. 600 crore from Dewan Housing Finance Limited (DHFL).
ED's side
DHFL and Kapoor hatched a criminal conspiracy: ED
According to ED, Kapoor bought Rs. 3,700 crore worth debentures of DHFL, which gave Rs. 600 crore loan to DOIT, an organization where three of Kapoor's daughters are directors. "DHFL's Kapil Wadhawan (chairman and MD) and Kapoor entered into a criminal conspiracy to defraud public money," said ED's counsel Sunil Gonsalves. He claimed the money, allegedly laundered by Kapoor, was used for personal purposes.
Details
ED named Kapoor's three daughters too
Highlighting that Kapoor's daughters — Roshni, Radha, and Rakhee, are 100% shareholders of DOIT via Morgan Credits Pvt Ltd, ED said, "The loan of Rs. 600 crores was given on the basis of mortgage of substandard properties having very meager value and by considering its future conversion from agriculture land to residential land." ED said Kapoor received an "undue pecuniary advantage" from DHFL.
Lookout circulars
Lookout circulars were issued against Kapoor's family members
Furthermore, ED said, "It is also apprehended that Rana Kapoor has similarly misused his official position in several other transactions and obtained illegal kickbacks directly or indirectly through entities controlled by him or his family members," the agency claimed. Lookout Circulars have been issued against all of Kapoor's family members. Yesterday, Roshni was stopped from boarding a flight to London from Mumbai.
Defense
Kapoor's lawyers said he was being made a scapegoat
Defending Kapoor, his lawyers Yusuf Iqbal and Zain Shroff, said the ED was deliberately "joining dots". They claimed the Rs. 600 crore loan was performing one, whose interests are being paid. "This is selective targeting because there is public outrage. You put the blame and make one man a scapegoat," Shroff reportedly told the special court in Mumbai yesterday. Kapoor was also present there.
What he said
Separately, Kapoor fought through tears, said he lost his 'baby'
Kapoor broke down and with folded hands told the judge he was "sick and hallucinating" after he lost his "baby (Yes Bank)". He was asked by RBI to step down as CEO in January last year. "An interest of Rs. 130 crore has been paid on loan taken by my daughters' company. There has been no delay in the payments to DHFL," he declared.
Quote
Willing to cooperate day and night: Kapoor
On ED's allegations that Kapoor wasn't cooperating, the banker told the court, "I want to cooperate with them. I am willing to cooperate day and night despite the fact that I haven't slept a wink."
CBI's case
CBI booked Kapoor and others for corruption
Adding to Kapoor's woes, CBI booked him, DHFL's Wadhawan and DOIT under relevant sections of IPC and sections 7, 12, and 13 of the Prevention of Corruption Act. The FIR was filed only after CBI's BS&FC unit, which concerns itself with bank frauds, looked into the matter. The top investigating agency is likely to conduct searches across Mumbai soon, said reports.