Chapter 10: The Maze of Malvern

Malvern was not only a shortlived enterprise but also a dubious one. In fact, it was liquidated within a week of Cox and Kings declaring bankrupt. Why would it be liquidated so soon if it was a genuine enterprise? The buck doesn’t stop there, the history and background of Malvern are shrouded in too much mystery and doubt. Here’s why – in less than six months after buying LateRooms, a hotel reservations platform, from the TUI group, Cox and Kings decides to sell it to Malvern – a company that was only 6 months old.

As someone who knows the Kerkars, it doesn’t strike to me as either a coincidence or a surprise that someone registered Malvern around the same time when Cox and Kings decided to buy LateRooms. But what’s more intriguing is that Cox and Kings bought LateRooms for £8.5 million and sold it to Malvern at £20 million in less than 6 months! Maybe PK can explain how the company’s valuation increased to more than twice its value within such a short time! 

It is also quite surprising that Adiuvat Investment Fund that owned 51% of Malvern agreed to the price label of £20 million – which is more than a two-fold increase within six months! However, Adiuvat Investment Fund, registered in the Cayman Islands, of all places, strangely had no representatives on Malvern’s board. 

Despite all these irregularities raising several alarms about the authenticity of Malvern, Yes Bank blindly lent INR 493 Cr to Malvern UK. PK stood personal guarantee for this loan even though the majority stake (51%) in Malvern is owned by Adiuvat, and it remains a mystery to this day as to why would Yes Bank allow PK to stand the personal guarantee when he is a minority stakeholder?

Also, considering that the information about Malvern’s parent firm, the Cayman Islands-based Adiuvat, is quite scarce (nobody knows who its partners are), it is surprising how Yes Bank did its KYC while lending the money to Malvern. And if they did do their KYC as they were mandated to, would Yes Bank know who is behind Malvern? Besides, the financial statement released by Malvern in March 2018 reveals that the company has been continually posting losses since its inception.

In its 2018 report, Malvern’s director states that the economic conditions pose ‘serious risk to the demand of their travel products’. So, why would Yes Bank still lend Malvern the money in November 2018 when the company itself declares loss and a risky future in March 2018? Did Yes Bank do its due diligence on Malvern?None of this is surprising now considering that Rana Kapoor, the erstwhile Chairman and co-founder of Yes Bank, is in jail today for money laundering.

Perhaps, the Enforcement Directorate’s finding answers all these questions. While investigating the Yes Bank scam, the ED found irregularities in the loans sanctioned to Cox and Kings group where it says that the group had “created multiple layers of onshore and offshore subsidiary across the globe” to siphon off the money. It also found that the documents submitted by Malvern for availing the loan were forged.

The ED also found out that the end-use certificates of its statuary auditor, BDO LLP, were also forged – as pointed out by KPMG, administrator of the UK-based entity.Malvern claimed that they were liquidated because of the financial impact of Covid-19.

But if that’s true, why would none of its parent companies, including Adiuvat which owned 51% of its stake, come to its rescue? Better yet, why would Yes Bank not bail it out considering that it once deemed Malvern worthy enough to lend INR 493 Cr of public money. 

Perhaps, the sole purpose of Malvern was to be a vessel for siphoning off the funds from Cox and Kings. Perhaps, Malvern was a sham that was brilliantly hidden in a maze of paperwork and bureaucracy that the Kerkars thought were too clever to uncover. But destiny would have the last laugh.

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