Former YES Bank managing director and chief executive officer Rana Kapoor used the lender as his “personal fiefdom” to carry out illegal activities and was the architect of a financial fraud aimed at creating wealth for himself and his family, the Enforcement Directorate (ED) claimed in a charge sheet filed against the co-founder.
The 62-year-old former banker, the first MD-CEO rank executive of a private bank to be charge-sheeted for suspected money laundering, was accused of “impropriety, illegality and rampant misuse of power” in what the central agency described as the hallmark of a scam that had been brewing for many years.
Practices followed by the YES Bank under Kapoor’s regime promoted a poor credit and compliance culture, centralisation of power and lack of institutionalisation, putting it in a situation where its survival came into question, said the document filed on May 6, a copy of which has been reviewed by Hindustan Times.YES Bank had assumed a very large exposure (relative to its net worth) to many entities that were facing significant stress and liquidity, it said.
Contacted over the phone, Kapoor’s lawyer Subhash Jadhav refused to comment on the charge sheet.
Kapoor was arrested on March 8 in connection with the illegalities at YES Bank during his stint as the head of the lender. The Reserve Bank of India (RBI) slapped a moratorium on the bank and superseded its governing board the same month, and co-opted State Bank of India (SBI), the nation’s largest lender, to rescue it.
The ED, which investigates money laundering offences, has claimed that during his tenure, Kapoor was instrumental in sanctioning loans worth ₹30,000 crore, out of which accounts worth ₹20,000 crore turned into a non-performing asset.
Kapoor, it has been alleged, accepted illegal gratification while granting loans and money was diverted through these companies.
A Mumbai court took cognisance of ED’s chargesheet on Saturday, summoning Kapoor, his wife and daughters in the case of money laundering on June 5.
The ED charged that Rana Kapoor, who co-founded the bank in 2004 and was MD-CEO till January 2019, had acted as the “prima donna,” “chief conspirator” and the “architect” of a scam aimed at diverting public money to create wealth for himself and his family.
“Rana Kapoor perpetrated the entire scam by firstly taking money out of YES Bank under the garb of debentures and loans, by abusing his position in the bank and secondly, receiving kickbacks/gratification for the same,” the ED charge sheet said.
The agency has pegged the proceeds of crime at ₹5,050 crore. But it is a complex case of financial fraud with a web of interlinked transactions and entities and the quid pro quo will come to light only after thorough investigations, it said.