Liquor baron Vijay Mallya had floated as many as 20 shell companies and used them as special purpose vehicle to route funds. Directors of these letter-box companies are either his personal staff or retired officials from his company.
This has been revealed in the Enforcement Directorate (ED) chargesheet filed before a special PMLA court in Mumbai in connection to the Rs 900 crore IDBI-KFA loan default case.
“Mallya was holding directly or indirectly movable and immovable assets, in the form of shares of publicly listed companies, by way of creating a web of shell companies. The assets were being in shell/ dummy companies created by Mallya,” the ED chargesheet said.
“Mallya has nominated directors in those companies who were either his personal staff, retired company official or a third person,” the chargesheet, which runs into 5000-pages, said.
The agency has identified shell companies such as Ms PE Data Centre Resources Private Limited, Ms Pharma Trading Limited, Ms Kingfisher Finvest Limited, Devi Investment Private Limited, Ms Mallya Investment Private Limited, Ms Explicit Consultancy Private Limited, Ms Ambitious Computech Private Limited and Vilora Consultancy Private Limited among others.
The chargesheet has mentioned a transaction made to a firm which reportedly had dummy directors. “An amount of Rs 63.10 crore (approximately) was paid to Ms UBICS Technologies Pvt Ltd (controlled by Mallya). Directors are dummy directors acting on behalf of Mallya”.
“This company was used as a special purpose vehicle to route the funds of Ms KFA as no other transaction from any other company has been noticed in this,” it said.
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 in clear violation of rules. It 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.
“There were unencumbered (free of debt) properties more than Rs 1,760.03 crore in addition to the properties mentioned in the personal guarantee submitted by Mallya to the IDBI bank”, the chargesheet said.
“It is suspected that major portion out of the amount of Rs 417.29 crore was remitted out of India to overseas parties from IDBI bank,” it said.
“Thus, the acts of Mallya, Ms UBHL and others, establish that a criminal conspiracy was hatched for obtaining or sanctioning of bank loan to KFA in gross violations of established procedures and the airline had no intention for repayment of loan of Rs 900 crore since the beginning,” the chargesheet said.
“The said loan amount along with interest totalling Rs 1,301.67 crore, therefore, falls within the sweep of the proceeds of crime in terms of section….Of the PMLA,” it said.
Apart from Mallya, the ED chargesheet has named eight other accused including his now-defunct Kingfisher Airlines (KFA), his United Breweries (Holding) Limited and senior employees and executives of KFA and the IDBI Bank.
The Enforcement Directorate is in the process of confiscating a Mallyaa-owned coffee estate in Karnataka’s Coorg and other assets in Bengaluru. These assets were attached under the Prevention of Money Laundering Act (PMLA). Recently, the ED had confiscated a Rs 100 crore worth farm house owned by Mallyaa in Maharashtra’s Alibaug. The agency has already frozen Rs 9,680 crore of property belonging to Mallya and Kingfisher Airlines.