ED registers money laundering case against Vijay Mallya, IDBI officials
The case is based on the FIR registered by the Central Bureau of Investigation (CBI) against Mallya and other officials of Mumbai-based IDBI for causing a loss of Rs 900 crore to the public sector bank.business Updated: Mar 07, 2016 23:48 IST
The Enforcement Directorate registered a money laundering case on Monday against Vijay Mallya while a tribunal said he cannot touch the Rs 515 crore he got from selling a liquor company as troubles mounted for the tycoon.
The ED case is based on a CBI probe into alleged “wilful default” by the high-flying owner of the now-defunct Kingfisher Airlines on a Rs 900-crore loan in conspiracy with IDBI Bank representatives.
Officials suspect senior bank officials received kickbacks worth crores for clearing the loan proposal and paying the money. The ED, the finance ministry’s enforcement wing, will now probe the roles of individuals who processed the loans and the reasons why procedures were not followed.
The Debt Recovery Tribunal barred British alcoholic beverages giant Diageo from paying Rs 515 crore as a severance package to Mallya who quit the chairmanship of its Indian company, United Spirits Ltd, last month, till the case against the liquor baron is decided. The DRT will hear the matter again on March 28.
The development comes at a time when India’s banking sector, dominated by about two-dozen state-run lenders, has been bruised by its highest bad-loan ratio in years as lagging economic growth hit companies’ abilities to service debt.
The United Spirits’ board last year asked Mallya to resign after an internal investigation spearheaded by Diageo found he diverted funds to other companies under his control, charges that he denies.
Banks owed money by Kingfisher Airlines have demanded “first right” to the Diageo cash, arguing that they were left with unpaid debts worth Rs 7,000 crore when the company collapsed more than three years ago.
The State Bank of India, which leads the consortium of lenders, declared Mallya— once known as “The King of Good Times” for his flashy lifestyle and lavish parties— a wilful defaulter last month. A wilful defaulter is one who uses borrowed funds for purposes other than it was meant for.
Mallya faced flak after he threw a two-day party in December to celebrate his 60th birthday, with Enrique Iglesias serenading the guests. Former Kingfisher Airlines employees wrote an open letter this month, blaming him for the grounding of the carrier and damaging the country’s reputation in the aviation industry.
The SBI and others have also appealed to the Karnataka high court that the businessman be arrested and his passport impounded.
“The DRT’s order is not a final one. It is only a temporary order and it is yet to decide the claims of the banks led by the SBI that they have the first charge on the Rs 515 crore receipts under the exit package,” said Manoj Kumar, managing partner of the corporate law firm Hammurabi and Solomon.
Mallya said he had initiated talks with bankss for a one-time settlement of the money owed by the airline. He also said he will not run away from lenders.
(With agency inputs)