Mallya Diverted Large Part of Rs 6K Cr Loan to Shell Companies: ED

Vijay Mallya.

(Photo: Reuters)

The Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) are set to chargesheet Vijay Mallya for allegedly diverting a considerable sum from the Rs 6,207-crore loan for the now defunct Kingfisher Airlines to shell companies.

According to The Times of India, the shell companies were in seven countries, including the US, UK, France and Ireland. Mallya has in the past denied charges of any wrongdoing.

Quoting sources, The Times of India reported that Mallya carried out the fraud in a “systematic way”.

Vijay Mallya would repay some part of the loan, which allowed him to gain the confidence of the banks, which gave him further loans. In all, he took Rs 6,027 crore in loans from a consortium of 17 banks.

An official to TOI

A plea for Mallya’s extradition is being heard in a UK court. The two agencies plan to share details of the fresh chargesheet with the prosecutors in the UK before December, ahead of the final hearing.

In an ongoing investigation into Kingfisher Airlines, it was revealed that out of the Rs 900 crore of his IDBI bank loan, Mallya allegedly routed Rs 400 crore overseas. These were passed off as payments for aircraft-renting and other ‘operational’ expenses.

According to The Indian Express, the investigation has revealed that Mallya colluded with IDBI Bank officials to secure loans without giving any valuable collateral. The bank too passed off the loan despite Kingfisher’s weak credentials. There were also discrepancies in the valuation.