Category: Banking & Finance

The Enforcement Directorate (ED) arrested the Avantha Group of companies promoter Gautam Thapar on charges of playing a key role in laundering more than Rs 500 crore in a Yes Bank loan fraud case.

Thapar, 60, was remanded in one-day custodial interrogation of the ED by a local court on Wednesday, after being arrested the previous night following raids by the agency against his businesses in Delhi and Mumbai.

In its remand paper, the agency alleged that “illegal favours are found to have been extended by Yes Bank to Avantha Group”. “Any quid pro quo for extending such illegal benefit is yet to be ascertained,” said the document, a copy of which was seen by ET.

The court sought the complete case file and the enforcement case information report, equivalent to a first information report (FIR), registered by the agency against Thapar and others in June. The agency had sought 14 days of remand.

The ED had filed a case under the Prevention of Money Laundering Act on the basis of an FIR filed by the Central Bureau of Investigation (CBI) which accused Thapar and others of defrauding Yes Bank.
The remand paper said that the ED probe had revealed money laundering through Oyster Buildwell Pvt Ltd (OBPL), Jhabua Power Limited (JPL), Jhabua Power Investment Ltd (JPIL), Avantha Power & Infrastructure Ltd (APIL), Avantha Realty Ltd and other entities “controlled and beneficially owned directly or indirectly” by Thapar.

It said that “sham agreements were made by these entities to fraudulently obtain huge amount running into more than Rs 500 crore from Yes Bank and further by different modes of layering the tainted amount was laundered and the loan account thus turned NPAs causing a loss of huge public money”.

Thapar’s counsel, Vijay Aggarwal, however said that his client was the “victim” in this case and that the said sham agreements were executed by Yes Bank executives to secure “valuable shares” of Thapar’s companies. He claimed that Thapar had also complained against the Yes Bank executives but no investigative agency had taken cognisance of the matter.

Aggarwal produced an email purportedly sent by a Yes Bank executive to show that the so-called sham agreements were “forced upon” Thapar’s group of companies. He further claimed that the entire transaction had taken place because Yes Bank wanted to ensure “evergreening of loans”.

The ED informed the court that Thapar’s statements were recorded twice in July and once on Tuesday, and that he allegedly “misled” the investigators.

“JPL entered into a sham operations and management agreement for its thermal power project with its group company namely JPIL for a monthly consideration of Rs 7.5 crore and JPIL entered into a further sham sub-contract for the same work with OBPL for a monthly consideration of Rs 15 crore,” alleged the remand paper.

It said that “to give a plausible justification and explanation for seeking of loan, a special clause related to provision of an interest free security deposit to be kept by OBPL to JPIL to the tune of Rs 514.27 crore was added in the non-genuine agreement executed between JPIL and OBPL which was sought as loan from Yes Bank”.

The agency alleged that OBPL is a paper company with no business activity. “The company had no employees working in it and has just held landholdings in its name,” said the remand paper.

The ED claimed that two directors of OBPL have “confirmed” to the agency that OBPL is a paper company. “And that OBPL had no prior experience of handling O&M work of thermal power plant. Neither was any service given by OBPL to JPIL with regard to the O&M agreement nor was any consideration paid by JPIL to OBPL,” said the remand paper.