Bank loan fraud was mutually beneficial for Avantha and Yes Bank: ED in court
In its response opposing Thapar’s bail request, the federal agency told a local court on Friday that the Rs 131 crore proceeds of crime had been funneled to Mauritius-based companies.
To support its accusation that the fraud benefited Avantha and Yes Bank, the agency referred to emails dated August 4, 2017 and August 8, 2017 allegedly sent by Thapar to Rana Kapoor, then chief executive and managing director. of Yes Bank. In one of the emails, the agency alleged that Thapar wrote to Kapoor “insinuating that a private equity investor has an interest in the companies (Avantha Group) and that due diligence is underway and that they will endeavor to provide a safe exit for Yes Bank from the Avantha Grouper”.
The agency claimed that a loan transaction between Yes Bank and Oyster Buildwell – a company it said was controlled by Thapar – was the result of a “criminal conspiracy hatched by officials from Avantha Group and Yes Bank”.
In its response to the court, seen by ET, the ED wrote: “The real purpose of the transaction was to repay existing Edelweiss and Aditya Birla Finance loans taken out by the Avantha group companies. However, on paper it has been shown that the purpose was to provide a security deposit to another group company under the guise of fictitious O&M agreements which were signed but were never intended to be executed. This conspiracy resulted in a loss for the investors of Yes Bank”.
The agency further stated that “Avantha Group was going through a financial crisis and Yes Bank wanted to reduce exposure risks within the group.” For this, various meetings were held, during which bank officials asked Avantha Group to either reduce exposure or provide the bank with additional security to secure its existing unsecured loan, the statement said. Ed.
He said: “During one of the review meetings, it was discussed that Yes Bank could refinance the group companies’ existing loans from Aditya Birla Finance and Edelweiss. The said transaction was beneficial for both parties as the bank obtained shares of CG Power (which was controlled by Thapar) worth Rs 735 crore resulting in additional security of Rs 220 crore for the bank and the group obtained the loans on better terms such as lower interest rate, 10 year term (and a) 42 month moratorium period during which only interest has to be paid.
This transaction relieved the Avantha group, as it did not have to renew existing loans at the end of each year. In addition, the interest rate fell from around 15% to 9%. Avantha Group received “instant proceeds of crime” to settle existing loans with Edelweiss and Aditya Birla Finance, ED claimed.
In a related development, the agency filed its first indictment against Thapar. The court will take up the case, to hear the indictment, on October 4.
Seeking bail for Thapar, his attorney Vijay Aggarwal argued that the bail law is an extension of the right to life and personal liberty as contained in Section 21 of the Constitution of the United States. ‘India.
The ED, in its response opposing Thapar’s bail, said a “structure has been devised by Avantha Group and Yes Bank officials to channel funds from one company to another company in the group in order to possibly repay the existing loans of Edelweiss & Aditya Birla Finance”. .
The agency said it recorded a statement from an Avantha Group employee who claimed that although Thapar is the non-executive chairman of the Avantha Group, he oversees all crucial financial decisions made by it.
The agency informed the court that employees of the Avantha group are being summoned to record their statement in order to trace the use of previous loans taken out by the companies of the group which were settled by the loan from Yes Bank.
Seeking to overturn Thapar’s bail plea, the agency said: “If bail is granted to Thapar, it could result in the cessation of the free flow of information and he could influence his employees, which would hamper the investigation.”
The agency had arrested Thapar on August 3 for playing a “key role” in laundering more than Rs 500 crore in a bank loan fraud case.
Thapar had denied the allegations, calling himself a “victim” of a fraud allegedly played against him by Yes Bank officials.