NEW LAW COULD APPLY TO INDIAN BUSINESSMAN FOR DEFAULTING ON REPAYMENT OF BANK LOANS
INDIA’S Enforcement Directorate (ED) on Monday (18) charged businessman Vijay Mallya and two of his firms for fraudulently “diverting” more than `37 billion (£411.1 million) in bank loans to a UK-based F1 motorsport firm, a T20 Indian Premier League (IPL) team, and for “enjoying private jet sorties”.
Mallya has been living in England since March 2016 and is fighting extradition to India where banks are chasing the tycoon for defaulting on loans.
The fresh charges against Mallya and his companies is likely to pave the way for him to be declared a “fugitive” under a new Indian law.
Mallya and his firms – Kingfisher Airlines Limited (KAL) and United Breweries (United Breweries Holdings Limited) – have been named by the ED in its voluminous prosecution complaint filed before a special Mumbai court under the Prevention of Money Laundering Act.
The charges centre around a complaint from State Bank of India (SBI) on behalf of a consortium of banks for causing losses of `60bn to them by breaching repayment of loans issued between 2005 and 2010, officials said.
“The SBI, which is the consortium leader, has calculated the amount (of the loan) to the tune of `9,990.07 crore (including applied interest) as on May 15, 2018,” the agency said in the chargesheet.
The ED charges allege that Mallya and officials of his company, Kingfisher Airlines Ltd, “hatched a criminal conspiracy for obtaining/sanctioning of bank loan to KAL in gross violations of established procedures and the firm had no intention for repayment of the loan”.
It also claimed that the accused – Mallya and KAL – projected the “brand value of the airline as a collateral security in spite of the same being hypothetical assets and suffering from deficiencies”.
It said the loans were obtained by placing the corporate guarantee of the firm UBHL and personal guarantee of Mallya, the chairman of KAL.
“KAL had offered as a security, negative lien on fleet of hire purchase/finance lease aircraft against the loans availed from the banks despite being well aware that the said security was only a symbolic security in nature and was grossly inadequate to cover the exposure of the banks,” the ED said.
It added that KAL “acquired” a corporate jet for use by Mallya, the chairman of the UB Group, the company’s senior officials and other chartered trips and it was stated that there would be surplus income from the operations of this plane.
“However, the said jet was never used for the said purpose and mainly used as a personal carrier for Mallya as it catered to his family members and friends,” according to the ED.
It also said KAL made payments of £30,348,452.25 to the UK-based Force India Formula One Team Limited (FIF1TL) and Mallya “surreptitiously transferred funds of the firm giving a false purpose of remittance and thus diverted the funds (loan amount).”
On the T-20 cricket team, the ED chargesheet said the Bangalore franchise of the IPL (named Royal Challengers) was purchased by Mallya and a “loan amount of `159m was siphoned off and diverted from the bank acount of KAL held with Deutsche Bank to Royal Challengers Sports Pvt Ltd, Bengaluru”.
Thus, it said, Mallya “deliberately and intentionally diverted the loan amounts from the bank accounts of KAL to other bank accounts of his interest”.
Officials said the agency will soon move a court, after the special court takes cognisance of the latest charge sheet, to get Mallya declared a fugitive under a new ordinance that has been enacted by the Indian government.
The ED last year filed its first chargesheet against Mallya, living in England, in the alleged `900-crore IDBI Bank-Kingfisher Airlines loan fraud case. (PTI)
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