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October 19, 2020

Cox & Kings CA found dead after turning into a witness in the multi crore scam

by CA Shivam Jaiswal in ICAI

Cox & Kings CA found dead after turning into a witness in the multi crore scam

Mumbai Police is investigating the death of a chartered accountant who was employed with the travel firm Cox & Kings marred by allegations of financial irregularities.

What happened?

  • Sagar Suhas Deshpande, a Chartered Accountant, was found dead on October 12 near railway tracks in Titwala city of Maharashtra’s Thane district.
  • Deshpande resided with his parents and sister in Thane. The 38-year-old went missing from his home on October 11, a few days before he had to report to police officials over the case.
  • The CA’s family identified his body on October 17 and police began investigating his death on the same day.
  • Deshpande turned a witness in a money laundering case on Cox & Kings which is being investigated by the Enforcement Directorate (ED).
  • He had reportedly promised crucial documents to the Economic Offences Wing (EOW) and was reportedly summoned by the crime branch on October 13.

What is the role of the ED?

The Enforcement Directorate (ED) is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance, Government of India, which enforces the following laws:

  • Foreign Exchange Management Act,1999 (FEMA) – A Civil Law, with officers empowered to conduct investigations into suspected contraventions of the Foreign Exchange Laws and Regulations, adjudicate, contraventions, and impose penalties on those adjudged to have contravened the law. 
  • Prevention of Money Laundering Act, 2002 (PMLA) – A Criminal Law, with the officers empowered to conduct investigations to trace assets derived out of the proceeds of crime, to provisionally attach/ confiscate the same, and to arrest and prosecute the offenders found to be involved in Money Laundering.

What was the Cox & Kings scam?

  • The Cox & Kings came under the ED scanner during a probe into the fraud loans issued by Yes Bank.
  • During the investigation, the ED found that Cox & Kings used ‘fictitious customers’ to launder thousands of crores it borrowed from Yes Bank. The firm was found to be involved in the falsification of accounts, overstating the sales figures and understating the debt figures and fictitious transactions.
  • According to the ED, during investigation in the Yes Bank case, irregularities were noticed in relation to the loan sanctioned to Cox & Kings Group.
  • The Group had created multiple layers of onshore and offshore subsidiary across the globe through which the monies were siphoned off.
  • Malvern Travel Limited, UK submitted the forged bank statement of RBS Bank, UK, State Bank of India, UK and forged end used certificates of a UK-based statuary auditor to avail the loan of Rs 422 crore from Yes Bank.
  • An amount of Rs 3,642 crore is outstanding against Cox & Kings Group in debt-ridden Yes Bank. It includes Rs 563 crore loan in the name of Cox & Kings Ltd (CKL), India; Rs 1,012 crore in the name of Ezeego One Travel & Tours Ltd (EOTTL), India; Rs 422 crore in the name of Cox & Kings Financial Services Ltd (CKFSL), India; Rs 1152 crore in the name of Prometheon Enterprise Limited, UK and Rs 493 crore in the name of Malvern Travel Ltd, UK.
  • The agency also found that from 2015 to 2019 sales of Rs 3,908 crore was made to 15 non-existent and fictitious customers.
  • The majority of the collection shown in ledgers from Ezeego was not found in the bank statements.
  • In another incident, the probe agency claimed that Cox & Kings sold Holiday Break Education Limited, UK (HBEL), a subsidiary of their firm, for Rs 4,387 crores and instead of discharging the liability of the bank, they siphoned off the majority of the money.
  • From this siphoning, USD 15.34 million was transferred to Kuber Investment Mauritius Pvt Ltd which was controlled by Peter Kerker.

What was the role of the deceased in the Cox & Kings scam?

  • Sagar Suhas Deshpande, joined Cox and Kings in July 2010 and rose to become Manager Finance. The deceased Chartered Accountant, worked at Cox & Kings as a general manager up until a year ago.
  • The travel agency ended their operations and Deshpande had been unemployed since then.
  • He was one among the firm’s employees questioned by the Enforcement Directorate (ED) and the Economic Offences Wing of the Mumbai Police in connection with alleged siphoning of several thousands of crores of rupees borrowed from Yes Bank.
  • The deceased was not named as an accused in the case but was cooperating with the ED in their investigation into the multi-crore scam.
  • Deshpande was asked to appear before the police on October 13 and bring along the said documents.
  • However, he went missing just two days before he could do that and was later found dead.

Police said they had initially registered an accidental death report but they are now investigating whether it was a suicide or murder.

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