An investigation into the now-defunct Kingfisher Airlines Ltd has found that the airline and its chairman Vijay Mallya allegedly routed overseas over Rs 400 crore out of the Rs 900 crore it obtained as loan from IDBI Bank Ltd.
Sources familiar with the probe told The Indian Express that the money was allegedly sent abroad as payments for aircraft rental leasing and other operational expenses.
Out of the total amount, sources said, IDBI granted a short term loan of Rs 150 crore to the airlines in October 2009. In the second tranche, they said, the bank loaned Rs 750 crore to Kingfisher, of which Rs 200 crore was in the form of a bridge loan and the rest for other purposes.
Kingfisher owes over Rs 9,000 crore to 17 lenders, including the SBI, IDBI Bank, Punjab National Bank, Bank of India, Bank of Baroda, United Bank of India, Central Bank, UCO Bank, Corporation Bank, Indian Overseas Bank, Federal Bank, Punjab and Sind Bank, and Axis Bank among others.
Investigating agencies such as the CBI and the Enforcement Directorate are currently probing the IDBI loan default by the airlines.
According to sources, the investigation has revealed that Mallya allegedly colluded with IDBI Bank officials to secure loans without giving any valuable collateral. They said that the money was allegedly used for purposes other than those specified by the airlines while seeking the loan.
For instance, sources said, investigators found that Kingfisher transferred about Rs 53 crore of the loan amount to Mallya’s Force India Formula One Team Ltd while about Rs 70 crore was diverted to two UB Group firms.
Apart from this, sources said, the agencies found that the airlines allegedly diverted money by paying higher rentals for aircraft leased from two foreign firms run by former employees of UB Group.
The probe found that IDBI approved the Rs 900-crore loan to Kingfisher Airlines despite its weak financials, low credit rating and negative net worth.
“The investigation also found discrepancies in the valuation of the Kingfisher brand, which was kept as collateral with IDBI Bank for the loan. The bank did not take any expert opinion on whether they could enforce the Kingfisher brand valued at about Rs 3,400 crore,” said sources.
In January, the CBI had booked five current and former IDBI bankers and four employees of Kingfisher Airlines for alleged default of the loan amount. The CBI has charged Mallya and the other accused under section 120B (criminal conspiracy), 420 (cheating) and under sections 13 (1) (d) and 13 (2) of the Prevention of Corruption Act.