The Enforcement Directorate (ED) has alleged that the now defunct Kingfisher Airlines promoted by Vijay Mallya “diverted” Rs 3,547 crore of the loan granted by a consortium of 17 lenders.
In a supplementary prosecution complaint (chargesheet) filed in a special court in Mumbai on Monday, the ED also said that Mallya did not fully disclose his assets while executing a personal guarantee agreement with the lenders when the loans of Kingfisher Airlines were restructured in December 2010. The agency has said that Mallya showed his total assets as Rs 1,395 crore, whereas the ED estimated his total assets at Rs 3,164.65 crore as on 2010.
The ED has alleged that Mallya “has amassed huge properties outside India, especially in United Kingdom, USA, France and other countries” and “has got interest in various companies which are created/ incorporated outside India”. “These facts of overseas properties and companies have not been mentioned in the asset/ liability statement submitted, and have been deliberately hidden from the banks,” it has said.
According to the ED, although United Breweries Holding Ltd, the corporate guarantor of Kingfisher Airlines, had “huge assets in the form of movable and immovable properties”, it did not infuse capital in the airlines. Instead, Kingfisher Airlines pledged shares to infuse equity in the venture and United Breweries “arranged for unsecured loans to Kingfisher from questionable sources and thereby increased the debt” of Kingfisher and “eroded the capital base and viability” of the airlines.
The ED has listed five instances of diversion of loan funds by Kingfisher Airlines. These include alleged diversion of Rs 3,432.40 crore by “over invoicing” of lease rentals of aircraft between April 2008 and March 2012; diversion of Rs 45.42 crore “for making payment towards the rental lease” of a corporate jet which was used “exclusively” by Mallya; diversion of Rs 50.90 crore from Kingfisher Airlines to Mallya-controlled Force Indian Formula One Team; diversion of Rs 15.90 crore from the airlines to Mallya’s firm that owned IPL team Royal Challengers Bangalore; and payment of Rs 2.80 crore to ICICI Bank as repayment of an earlier loan to Kingfisher Airlines.
According to the agency, the total dues including interest of Kingfisher Airlines to the consortium of banks stood at Rs 9,990.07 crore as on May 15 this year.
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The agency has accused Kingfisher Airlines and Mallya of money laundering and said they are involved in “concealment, possession, acquisition and use of proceeds of crime”. It has also accused United Breweries Holding Ltd of assisting Mallya in money laundering by not honoring a corporate guarantee that the company gave to the banks, which was to be invoked in case of a loan default by the airlines.
The ED has said that Mallya misrepresented to the banks to “deliberately” divert funds from Kingfisher Airlines to Force India Formula One Team. Detailing the misrepresentation, the agency has said that Kingfisher obtained loans from banks and transferred the funds to its bank account in London on the pretext of “making local payments in United Kingdom” for “fuel, airport charges, hotel expenditure and other operating expenses” in connection with their flights there. However, the ED found that Rs 50.90 crore transferred to the London account of the airlines was diverted to Force One Formula One Team.
In another instance, the probe agency found that of the Rs 500 crore loan granted to Kingfisher Airlines by State Bank of India in 2009, the airlines transferred Rs 24.20 crore to its account in UCO Bank in May 2009. From this, Kingfisher Airlines later transferred Rs 16 crore to its account in Deutsche Bank and transferred Rs 15.9 crore to Royal Challengers Pvt Ltd that owns the Bangalore IPL team.
The ED has also said that Rs 45.42 crore received by Kingfisher Airlines from SBI and Punjab National Bank was used to pay the lease rental of a corporate jet that was bought for VVIP tourism and chartered trips by the airlines but ended up becoming Mallya’s “personal carrier”.
The ED is planning to move a special court this week for “immediate confiscation” of Mallya’s attached assets valued at over Rs 12,400 crore under the recently promulgated Fugitive Economic Offenders Ordinance. Mallya has been declared a proclaimed offender by a special Prevention of Money Laundering Act (PMLA) court and is currently fighting extradition in UK.