The Enforcement Directorate (ED) has filed its first chargesheet against liquor baron Vijay Mallya, his now-grounded Kingfisher Airlines and his United Breweries (Holding) Limited in connection to the Rs 900 crore IDBI-KFA loan default case. Senior executives of the Kingfisher Airlines and the IDBI (Industrial Development Bank of India) Bank have also been named in the chargesheet.
The chargesheet, which runs into 5000 pages, was filed before a special anti-money laundering court in Mumbai on Wednesday (14 June). The chargesheet was filed under various sections of the Prevention of Money Laundering Act (PMLA).
Calling Mallya the “prime mover of the entire plot”, the ED chargesheet – with the help of flow charts and diagrams – explains how the bank loan fraud was done. The chargesheet describes how funds of over Rs 400 crore were moved abroad in alleged violation of rules. The chargesheet further describes how a significant portion of the funds obtained from the bank loan were diverted illegally to fund the entities of the beleaguered businessman in India and abroad.
The ED chargesheet talks about diversion of funds to Mallya-owned entities such as Watson and Force India and software consulting firm UBICS. The chargesheet further suggests that funds were diverted Mallya’s Formula-1 car racing event and the two firms controlled by him — UBICS Technologies Pvt Ltd and UB Engineering Pvt Ltd.
According to the chargesheet, Mallya, KFA along with IDBI bank officials were “criminally conspired to obtain funds to the tune of Rs 860.92 crore despite weak financials, negative net-worth, non- compliance of corporate credit policy of new client, non- quality collateral security and low credit rating of the borrower, out of which Rs 807.82 crore of principal amount remains unpaid”.
The ED chargesheet shows how Mallya routed overseas over Rs 417 crore of the Rs 860.92 crore he secured as loan from IDBI Bank for aircraft rental leasing and operational expenses of Kingfisher Airlines.
Out of the total loan of Rs 860.92 crore, sanctioned and disbursed by IDBI, Rs 423 crore was remitted out of India, the chargesheet said. “The said payments were shown to be made towards aircraft rental leasing and maintenance, servicing and spare parts,” it said.
“Vijay Mallya and others accused are guilty of money laundering under Section 3 and punishable under Section 4 of PMLA. Trial should be started against them and property attached (frozen) in the matter worth Rs 808 crore should be confiscated,” the chargesheet said in its concluding remark.
The total loan sanctioned by the IDBI bank to Kingfisher Airlines was Rs 860.92 crore. The loan amount rises to Rs 900 crore adding interest.
The ED has requested the court to confiscate Rs 808 crore worth of property of Mallya, which includes his farmhouse near Mumbai, UB City Mall in Bengaluru, his residential property in Mumbai and Bengaluru to recover the dues. The ED has already frozen Rs 9,680 crore of property belonging to Mallya and Kingfisher Airlines.
Vijay Mallya is in his safe haven in London after siphoning up over Rs 9,000 crore of loan taken from different banks in India over a period 11 years. Mallya owes loans to as many as 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.