Updated: November 26, 2020 10:25:32 pm
Cox & Kings CFO Anil Khandelwal (left) and promoter Peter Kerkar. (File photo)
The Directorate of Enforcement (ED) arrested Ajay Ajit Peter Kerkar, the promoter of the bankrupt travel company Cox and Kings, on Thursday in connection with his money laundering investigation.
Cox and Kings owes Rs 5.5 billion to banks and financial institutions and is one of the main borrowers of Yes Bank Ltd when co-founder Rana Kapoor was at the helm. Yes Bank has an exposure of more than Rs 2,267 crore to Cox & Kings Group.
The travel company came under the scanner The agency launched an investigation into allegations of bribery received by Kapoor instead of making loans to various companies that have now defaulted on payments. Kapoor, who is currently in custody, has denied these allegations.
In April, The Indian Express, in a series of stories, reported that a forensic audit found that the travel company carried out 21 billion rupee related party transactions over four years (2015-2019) to divert funds. It also found that Cox & Kings had falsified records, posted sales worth Rs 9,000 crore to more than 160 customers that are either fake or non-existent, and inflated bank balances.
Last month, the DE arrested the company’s chief financial officer, Anil Khandelwal, and his internal auditor, in connection to the case.
The audit conducted by PricewaterhouseCoopers (PWC) subsequently discovered that the company recorded loans and advances from related parties of Rs 9,494 million during the same period, of which approximately Rs 4,008 million were loaned to 11 foreign entities connected to Cox & Kings. According to the audit report reviewed by The Indian Express, of these overseas transactions, the transfers of Rs 581 crore were allegedly made in violation of Reserve Bank of India (RBI) regulations.
The forensic audit also found that the company did not accept board approvals for loans of Rs 6,071 crore made to at least 20 related parties between 2014 and 2019.
The audit revealed that Cox and Kings gave 1.1 billion rupees to Alok Industries, a stressed company that went bankrupt in 2017, even though the travel company had no business relationship with the company. Significantly, Khandelwal is the brother of Alok Industries CFO.
The ED found that Cox and Kings sold their British subsidiary, Holiday Break Education Limited, UK (HBEL) for Rs. 4387 crore and “diverted most of the money.” Of the proceeds from the sale, at least $ 15.34 million was allegedly transferred to Kuber Investment Mauritius Pvt Ltd, a company controlled by Ajay Ajit Peter Kerkar.
Ezeego Travel and Tours, another subsidiary of the group, is accused of diverting Rs 150 crore to Redkite Capital Private Ltd, a company promoted by CFO Khandelwal and auditor Jain. This fund was used to purchase a majority stake in Tourism Finance Corporation Of India Ltd, a listed NBFC.
Cox & Kings, promoted by Kerkar, his family and some of his firm, was sent to bankruptcy court in October 2019 after defaulting on payments.
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