Investigative agencies are trawling through 1.5 lakh emails of Vijay Mallya, chairman of the now defunct Kingfisher Airlines, to gather possible evidence of any “undue favours” that may have been given to his firm, said two people familiar with the investigation.
These emails, which Mallya sent to senior company officials, political leaders and bankers, may form a part of the CBI’s chargesheet — which is expected in the next few months — on the Rs 6,900 crore loan default by Kingfisher Airlines. Most of the loans were granted to Kingfisher Airlines between 2006 and 2009, when Vijay Mallya was a Member of Parliament.
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It was in November 2010 that banks restructured Kingfisher Airlines’s debt for the first time. The consortium of lenders led by State Bank of India (SBI) converted Rs 1,355 crore of debt into equity at a 61.6% premium to the market price of the Kingfisher Airlines stock.
Besides, the bankers stretched the period of repayment of loans to nine years with a two-year moratorium, cut interest rates and sanctioned a fresh loan.
The CBI, in its current chargesheet on the Rs 900 crore IDBI loan to Kingfisher Airlines, has highlighted the “undue favours “ given to Mallya while granting loans despite the poor financial health of the company. The CBI has claimed that in 2009-10, the bank approved one of Kingfisher Airlines’s loan requests within a day of receiving the proposal.
In August 2016 and earlier, both the CBI and the Serious Fraud Investigation Office had summoned all the former chairman and managing directors (CMDs) of the 14 public sector banks that had lent to Kingfisher Airlines to ascertain the rationale behind extending loans to the airlines even when it was performing poorly and on the due diligence done by the banks before lending.
In a series of tweet on January 27, Mallya, who is in the UK, however, said all he sought was help related to policy change; not loans. “I begged for help. Not for loans but policy changes — declared goods status for fuel, flat rate of state sales tax instead of ad Valorem, FDI etc,” said Mallya in a tweet. “Was interrogated by CBI and submitted documentary evidence. Not one Rupee was misused. On the contrary we invested over 4500 Crs into KFA,” he said in another.
“For 30 years I built the worlds largest Spirits Company n India’s largest Brewing Company. Also launched the finest airline. This is what I get. I am kind of getting used to these witch hunts coming from all directions with no legal basis whatsoever. Shows what Govt Machinery can do,” Mallya tweeted.
So far, the CBI has arrested four senior IDBI Bank officials, including its former chairman Yogesh Agarwal, for granting loans to Kingfisher Airlines “dishonestly”.
In its chargesheet, the agency has alleged that IDBI officials “abused their official positions as public servants and relaxed the vital pre-disbursement and security creation conditions” to “dishonestly facilitate disbursement” of loans to Kingfisher Airlines in 2009.
In November 2009, the CBI notes, the Risk Rating Committee of the bank disregarded the concerns raised by its own Risk Department and upgraded Kingfisher Airlines from a credit rating of ‘B’ to ‘BB’ without any “detailed reasoning or rationale” while granting a loan of Rs 750 crore. The CBI alleges that this was done by the accused bank officials in collusion with Mallya and Kingfisher officials in order to ensure that its loan proposal would become eligible for bank finance. The CBI has also claimed that IDBI Bank officials facilitated the loan at various stages, including eventually disbursing the entire loan “without compliance of vital terms and conditions of sanction and without creation of securities”.