In one such case, which involved DHFL, the focus was on Belief Realtors. YES Bank had sanctioned a loan of Rs 750 crore to Belief Realtor Pvt. Ltd — a company of the DHFL group controlled by Dheeraj Wadhawan and Kapil Wadhawan — for slum rehabilitation. It was sanctioned on 18 June 2018 by the Management Credit Committee headed by Rana Kapoor, despite internal red flags, it was alleged.3 The chain that the ED has highlighted has allegations of both round-tripping and evergreening again.
It goes like this: YES Bank took Rs 118 crore as processing fee and the GST on that amount. The remaining Rs 632 crore was transferred to Belief Realtors. Belief Realtors immediately transferred the money to KYTA Advisors Pvt. Ltd, who then transferred the full amount to RIP Developers Pvt. Ltd. From there the money was transferred to DHFL and not used for sanctioned purpose. As much as Rs 450 crore was granted as loan to two different entities, who used it to repay their existing borrowings from YES Bank, in an alleged round-tripping and evergreening case. How would such a transaction help YES Bank? Since YES Bank got an upfront payment of Rs 118 crore, it showed this as profit and Rs 450 crore as loan repayment by granting a new loan of Rs 750 crore, which the bank didn’t show as a bad loan as well. All such bad loans came to the fore when the clean-up was initiated.
A special court extended the ED custody of Rana Kapoor till 20 March. He’d been arrested under provisions of the Prevention of Money laundering Act (PMLA) as he was allegedly being uncooperative with the probe. In the chargesheet, it has been reported that the investigating agency is learnt to have given the details of about 170 bank accounts used to siphon off kickbacks. Further, it has explained the role of about 112 shell companies in India and abroad, created solely to launder money by the Kapoor family. The chargesheet also talked of how the family bought properties out of the kickbacks it received from the companies whose loans were disbursed by the bank on Rana Kapoor’s instructions. So far, the agency has identified assets both in India and abroad belonging to the Kapoor family. The properties overseas include two luxury hotels—one in New York (worth over $20 million) and one in London (£30 million). This is not all. The family also has two residential apartments in London, valued at £15 million each, and a yacht in the UK.
Rana Kapoor’s six bungalows in Delhi’s upscale localities, including the ones in Jor Bagh, Hauz Khas and on Kautilya Marg, have also been identified. One of these, it was reported, was bought from fugitive offender Vijay Mallya. So have six flats and land in Mumbai and its suburban areas. The agency will start attaching them after the lockdown is over.
The CBI has booked Rana Kapoor for allegedly accepting a over Rs 307-crore bribe in the form of a Lutyens’ zone bungalow from a realty firm to go easy on bank loans amounting to around Rs 1900 crore to the seller’s group companies — Gautam Thapar and Avantha Reality.
Bliss Abode Pvt. Ltd is a privately held company, in which the directors are Bindu Rana Kapoor and Ajita Madhukar Potdar. Interestingly, Ajita is a co-director with Bindu Rana Kapoor in sixteen companies. The only place where Ajita isn’t co-director with Bindu Rana Kapoor is DoIT E-Solutions (India) Limited, where Bindu Rana Kapoor and Radha Kapoor Khanna are the co-directors.
Who is Ajita Madhukar Potdar, who Rana Kapoor’s wife trusted so much? On the face of it, Ajita was one of the trusted employees of yet another company controlled by the family, DoIT Urban Infranetwork Pvt. Ltd, where one of the three directors is Alkesh Tandon — the husband of Rana Kapoor’s second daughter, Rakhee Kapoor Tandon. Ajita is also the daughter of late Sheila Kapoor’s (Rana Kapoor’s mother) best friend. That is where all the trust came from. DoIT Urban Infranetwork Pvt. Ltd is the subsidiary of Morgan Credits Private Limited — a part of the erstwhile promoter group in YES Bank. Rana Kapoor himself is said to have trusted only one person outside his family — his personal secretary Lata Dave.
Bliss Abode spend Rs 378 crore to buy 40, Amrita Shergill Marg in New Delhi, the family home of industrialist Gautam Thapar in September 2017. The property was mortgaged to YES Bank before it was purchased by Bliss Abode. ‘The transaction raises questions about corporate governance practices at the bank, and whether a very close relative of the chief executive of the bank should be buying a property that has been offered as collateral to the lender,’ journalist Varun Sood, who researched the deal for two months, wrote in a LinkedIn post.
Interestingly, the charge on the property was released by the bank to facilitate the deal between Bliss Abode and the Thapar family, based on the understanding that the money raised will be used to pay an existing loan, the Sood’s post said. Gautam Thapar’s Avantha Realty mortgaged his bungalow, built over a nearly 6000-square-yard area, in March 2016 to YES Bank. Business tycoon Sunil Bharti Mittal, who Rana claimed was one of his childhood friends, is just one of the residents of this row of homes that houses billionaires. Avantha Realty, the privately owned firm which owned the property, had borrowed Rs 400 crore at an 11 per cent interest.
‘The bank’s in-house experts had valued the property at Rs 330 crore. Six months later, in October 2016, property consultants Cushman & Wakefield, hired by YES Bank, put a market value of Rs 357 crore [on it]. In June 2017, Thapar expressed interest to sell this property and asked YES Bank to remove the charge on the property. The bank removed the charge, claiming that it is normal practice. Three months later, in August 2017, Rahul Bhatia, the owner of IndiGo airlines, expressed interest to buy the property for Rs 375 crore. For some reason, the deal fell through. Finally, towards the end of August, Bliss Abode emerged as the winner when it agreed to pay Rs 378 crore to buy the property,’ the post added.
However, according to the ED, the cost of this bungalow, as told to them by Rana Kapoor during the questioning, stood at Rs 405 crore. Other than this, Bliss Abode also has a bank balance of Rs 3.25 crore. This deal was one that became the last nail in Rana Kapoor’s coffin as CEO and MD of YES Bank.
Rahul Bhatia is believed to have paid the first installment towards acquiring the property. However, as he was waiting to pay the remaining sum and get the registration done in his name, the deal was cancelled. Bhatia red-flagged the issue to the government, who in turn alerted the RBI. When Rana Kapoor, who was at his peak at that time, got a call from RBI officials, he tried to throw his weight around. This, coupled with the fact that the RBI had been keeping a close eye on him, meant that the game was over for him at YES Bank!
Where was the money for Bliss Abode Pvt. Ltd coming from? The loan as of March 2020, according to the ED, was Rs 375 crore by Indiabulls Housing Finance Ltd. The interest paid to Indiabulls on this amount by Bliss Abode stood at Rs 39.50 crore. Other than that, there was also a capital infusion of Rs 72.75 crore by RAB Enterprises, an investment holding company, according to ED documents, with interests in real estate and mutual funds. RAB Enterprises, in turn, has investments in fifteen companies, and in all these companies Bindu Rana Kapoor and Ajita Madhukar Potdar are directors. RAB Enterprises has infused capital worth Rs 600.25 crore in these companies, along with holding mutual fund investments in the Aditya Birla Group worth Rs 12 crore. The company was founded in 2005–06.
The total outstanding of Indiabulls to RAB enterprises, as on 1 February 2020, stood at Rs 2540 crore. The total loans granted between 2013 and 2020 to Indiabulls stood at Rs 5661 crore — but a large portion of it was repaid by the time Rana Kapoor was arrested. This is not even a fraction of the complex web that Rana Kapoor was channeling his wealth through.
Figure 1:
*Ajita Madhukar Potdar is a family friend of the Kapoors
Source: Ministry of Corporate Affairs
The majority of assets Rana had created were given to his family. As one person who has closely tracked these investigations told me: ‘If you see, this showed his level of care for his family.’ Yes, Rana Kapoor was a complete family man. In fact, through one of these companies, DoIT Sports Management India Pvt. Ltd, where the directors are Radha and Roshini, the family also owns famous Pro Kabbadi League team Dabang Delhi. In many of these compan
ies, there were directors who were not part of the immediate Kapoor family, but in many cases the address of the other companies that these non-Kapoor directors were part of was One, Indiabulls Centre in Lower Parel, Mumbai.
In fact, the ED had summoned Sameer Gehlaut of Indiabulls, along with other major defaulters of YES Bank. But by then the COVID-19 pandemic hit the country and the centre of investigation, Mumbai, was one of the worst-hit places in the country. Due to these constraints, the ED delayed the questioning of other related parties.
But there are, according to my own opinion, serious loopholes in the investigation. The ED alleges that Rana Kapoor misused the official position for financial gains by taking kickbacks. But what was the motive? The last time a banker was alleged of doing so was in the case of Chanda Kochhar of ICICI Bank — who was just an employee there. But Rana was the promoter of YES Bank. Why was he allegedly doing things that would end up damaging his own bank in lieu of the kickbacks? Were the promoters’ funds just a front? We will probably never know the answers to these questions, as the investigation is now centered around Rana Kapoor alone. In hindsight, Rana Kapoor would have never wanted his career to end in such a way, and he was doing all this because of his greed and no one had questioned him when he was able to show good profits.
DEFINING SECRECY
While YES Bank was going hammer and tongs at defying governance metrics, no one batted an eye. There was hardly any media scrutiny. The bank’s shareholders were living in a parallel world where YES Bank was an ideal example of what banking should be. The valuation of the bank was skyrocketing at a time when it was lending to the most stressed companies in the country. How was Rana able to pull off such a feat? Rana, right from the beginning, was overly conscious of the image he was creating for himself.
To broadly understand Rana Kapoor’s media manipulation, you have to divide the history of YES Bank into two phases: pre-Ashok Kapur and post-Ashok Kapur. In the pre-Ashok era, there were checks and balances on how Rana Kapoor used to operate. However, after Ashok’s death, this changed. Even during his novice days at Bank of America, he had hired a public relations team to carefully curate his image. Here was a banker, who was a small part of a big system, creating an image for himself, sitting behind his desk at yet another foreign bank in India. But the PR machinery started when he started, or rather connived to start, YES Bank.
Back in 2004, when Rana started YES Bank, he started an amazing marketing campaign to woo retail customers — why can’t you have an airline kind of experience? In all fairness, Rana was a corporate banking guy, and retail banking was direction given by Ashok Kapur. But then Rana knew that Indian customers were tired of the boring look of bank branches. He pitched it as the new-age retail bank with an amazing experience. As irony would have it, it was corporate banking that brought about the downfall of YES Bank and Rana Kapoor.
There was no mess when Ashok Kapur was around, which is why, Rana’s PR campaign wasn’t aggressive at all. To understand Rana’s media manipulation, we have to understand Maslow’s hierarchy of needs. In a paper in 1943, American psychologist Abraham Maslow proposed a hierarchy of needs for a human being. In ascending order, they are psychological needs, safety needs, belongingness need, self-esteem needs and self-actualization needs. Rana used all these needs of journalists and various publications to make sure that nothing negative about him came out. ‘He had that attitude of whatever it takes when it came to management,’ a person who had worked with Rana on his image management told me.
While Rana might have been aggressive and a control freak both at office and at home, he was a different man in front of the media — calm, sober and soft-spoken — at least on the face of it. He was always available. ‘Even if you called him at midnight, he would respond. Biwi ka phone uthaye ya nahi, media ka uthaata tha (Even if he didn’t receive his wife’s calls, he would receive calls from journalists),’ a person who worked with him closely said. He was available for each journalist — be it a cub reporter, rookie, correspondent or editor. He gave them free access to his cabin.
Now imagine this situation: a cub reporter who has joined a week back is working on a banking story. Somehow the reporter gets Rana Kapoor’s number. He calls him up, talks to him, gets a quote from him. A cub reporter, who was probably working on his first story, has interacted with the head and de facto owner of India’s fourth largest bank. What else does he need? Next time, he might feel obliged to Rana, who has played with Maslow’s hierarchy of needs to his advantage here. While the cub reporter should have focused on safety needs, Rana played on his self-esteem needs. Also, for a journalist, at the end of the day, getting access to stories is the biggest thing. And Rana was giving them that access. There is a growing laziness on the part of journalists and increasing dependence on planted stories. Rana knew this and capitalized on it.
In fact, I personally experienced some strange behaviour from Rana. When I questioned him about his absence from the country at a crucial point in time, he talked it away in the sweetest way possible. I smelt something foul initially. Here was a journalist who was tracking him, yet he was sweet and courteous rather than being defensive. As I spoke to the people who knew him through all this, it was understood that the ‘smooth-talker’ act was a ploy he used to get out of difficult situations.
To give you some perspective, it has been four years since Vijay Mallya escaped India, yet the media has been unforgiving of him. In Rana Kapoor’s case, the media ire has died down. This is probably because Mallya rubbed the media on the wrong side during his stint at Kingfisher, unlike Rana, who was a different person.
He used to regularly organize polo matches at Jaipur Polo Ground in Delhi, mostly on Sundays. The capital’s elite polo lovers got together on those days to witness the match. From designers to business tycoons, a host of ‘stylish’ people would turn up. These were the elite and exclusive dos that Rana used to host. At these parties, he used to invite media barons and top editors from around the country. These were the parties where deals worth crores were made, and everyone wanted to be a part of it. Rana gave the access to this elite deal-making clubs.
On one such occasion, he invited an editor of a magazine that his family later went on to buy. The editor declined. When Rana’s team insisted, the editor said that he liked to spend time with family on weekends. Rana’s team members intervened saying, ‘Arey parr aap bhabhi ji ke saath aana. Bachon ko bhi saath laaye (You come with your wife. Get your kids along too).’ But the editor refused.
The editor left the publication at the end of 2013. In 2014, Rana’s daughter Radha went on to buy a substantial stake in that publication. The owner of that publication, who had bought it just a year ago from another media group by taking a loan from yet another media baron, was looking to deleverage, which in simpler terms means reducing debt. At this time, Radha Kapoor bought about 40 per cent stake in the publication for about Rs 12 crore and gradually increased it to 65 per cent. One of the later editors of the publication told me that there was allegedly a standing instruction to give wide publicity to everything related to Rana Kapoor and YES Bank. The plan ultimately was to buy controlling stakes in a few more media house. But since they were bleeding money on the first venture itself, the plan didn’t take off.
That said, there were journalists who tried to dig deeper. In such situations, Rana Kapoor allegedly used to write long mails to the owners of the media houses concerned, complaining about the journalist’s behaviour and the amount of money Rana Kapoor and YES Bank used to spend on advertisements in that publication, according to two different sources in the know. If the media owner didn’t budge, Rana didn’t shy away from getting political interference. ‘He had good friends in both parties (Congress and BJP). He wouldn’t even mind calling them to stop journalists from investigating him,’ one of the people who worked with Rana Kapoor on his image management told me. Rana allegedly didn’t mind filing defamation suits on publications if they still pursued and published the story, which was very ra
re.
This was not the only thing he would do. He would make sure that the image he sent across to the public was squeaky clean. He once called an editor, then the owner of the publication that he later went on to buy for a simple thing — YES Bank wasn’t awarded the best mid-size bank by that publication. When they told him that it was the jury’s decision, he actually went and complained to the jury, only to be snubbed by them, a person privy to the conversations told me.
Again, he had a long stint with ASSOCHAM, which gave him access to rub shoulders with the who’s who of India’s power circle. ‘He used to make sure that if he came to any event, he was seated right next to the top minister. Else, he wouldn’t come,’ a media person who dealt with him as part of his events told me. Rana knew how to keep the limelight on him but also knew how to be subtle about it.
That is not all. Rana used to make judicious use of partnerships and sponsorships. He gave Rs 50 crore to a prominent business daily to act as a sponsor for its event. The idea was that he would get to rub shoulders with Prime Minister Narendra Modi at the stage, and ultimately build on his image in the business community.
And he never wanted to be audited about what he did about those partnerships. The business magazine of a Noida-based magazine-turned-TV-and-magazine conglomerate had a tie-up with YES Bank. The bank would supply them with surveys on small and medium enterprises. There wasn’t much editorial vetting of the content that was published. In 2014, a new editor took over at the publication. He started insisting on the disclosure about the methodology employed. The editor wasn’t willing to take responsibility of content that he wasn’t absolutely sure of. ‘How could I, as an editor, let them publish anything when I didn’t know anything about the procedure and methodology?’ the editor told me YES Bank and Rana Kapoor weren’t willing to relent and so the partnership was called off the next year.
The Banker Who Crushed His Diamonds Page 14