Jet meant for airline was diverted for use by Mallya and his political friends: SFIO report

According to SFIO report, the KFAL applied in February 2006 to the Ministry of Civil Aviation (MOCA), seeking a no-objection-certificate (NOC) for import of a jet, now registered as VT-VJM.

Written by Khushboo Narayan | Mumbai | Updated: October 8, 2017 7:09 am
Vijay Mallya, Kingfisher Airlines, Vijay Mallya private jets, Vijay Mallya Kingfisher Airlines, Serious Fraud Investigation Office, SFIO, Vijay Mallya fraud, India News, Indian Express news An Airbus corporate jet was bought when Kingfisher Airlines was in deep trouble.

A probe by the Serious Fraud Investigation Office (SFIO) has found that Kingfisher Airlines Ltd (KFAL) purchased an Airbus corporate jet A319-100 for non-scheduled air transport services operation in November 2006 but it was allegedly diverted for personal use of company chairman Vijay Mallya and his “family members as well as political and personal friends”.

The jet, the SFIO noted, was purchased when the financial position of the airline was “precarious” and “the entire share capital including reserves were completely eroded”.

According to SFIO report, the KFAL applied in February 2006 to the Ministry of Civil Aviation (MOCA), seeking a no-objection-certificate (NOC) for import of a jet, now registered as VT-VJM. But the airline, the SFIO found, also applied to the MOCA for a separate NOC to use the same jet for overseas travel of Mallya, senior employees of UB Group and for “VVIP tourism and chartered trips to various destinations world over”. The NOC was also sought on the ground that surplus income would be generated from operations of the corporate jet.

Kingfisher financed the purchase through a financial lease agreement with a firm in Cayman Islands. The SFIO report said Kingfisher capitalised the purchase cost of Rs 293.2 crore in its books. It also booked the lease interest, lease rentals and operational expenses.

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The SFIO investigation showed that the jet “was never used” for non-scheduled air transport passenger services, as claimed before the Directorate General of Civil Aviation (DGCA) and MOCA. The jet was mainly used as a personal carrier for Mallya, the report stated.

“It was extensively used by the family members as well as political and personal friends of VJM (Vijay Mallya) as evidenced by the passenger manifest of this aircraft provided by Airports Authority of India (AAI), Western Region, Mumbai vide its letter dated 15.09.2016 for some dates during 2007 to 2010,” the SFIO report stated.

It said that Kingfisher did not raise any invoice to recover expenses for Mallya’s travels when he did so on account of work related to other UB Group firms.

Read | Kingfisher struck deals with board directors: SFIO report

When contacted by The Sunday Express, Mallya’s spokesperson said they did not have any comment to offer. The SFIO has charged Mallya, United Breweries (Holdings) Limited (UBHL) and a few top officials of Kingfisher under section 542 of the Companies Act 1956 which fixes liability on individuals and entities for fraudulent conduct of business.

It has also referred the case to the Central Board of Excise and Customs (CBEC) for “recovery of tax dues from the promoter directors of KFAL as their personal liability in view of fraudulent conduct of business” and “in respect of any concessions passed and recovery of the duty forgone” for the jet as a “chartered services aircraft which was used as a personal carrier”.

Currently, the jet VT-VJM is in the custody of the Service Tax department. In December 2013, the department seized the jet to recover part of the over Rs 400 crore tax dues of the company. The Bombay High Court has given its nod for auction of the jet but the Service Tax department has not been able to sell it for lack of a satisfactory bid.

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