The Enforcement Directorate, on Tuesday, 19 June, charged absconding liquor baron Vijay Mallya, and two of his firms, for fraudulently "diverting" over Rs. 3,700 crore bank loan funds to a UK-based F1 motorsport firm, a T20 IPL team, and for enjoying private jet trips.
The ED's fresh chargesheet against Mr Mallya and his firms is likely to pave the way for him to be declared a "fugitive" under a new Indian law, reported PTI.
A day earlier, the ED had filed a supplementary chargesheet against Mallya in the Prevention of Money Laundering Act (PMLA) case, alleging that the bank loan worth Rs 6,027 crore (which along with interest has reached close to Rs 10,000 crore) was diverted into Mallya’s personal expense rather than the operational expenses of Kingfisher Airlines.
In the first chargesheet, filed on 14 June 2017, the ED charged Mallya, Kingfisher Airlines Limited, and seven others with money laundering.
The latest chargesheet, which has been assessed by The Quint, says that Mallya never had the intention of repaying the massive loan.
“The acts of offering the above mentioned collateral security on the part of Dr Vijay Mallya, M/s UBHL (UB Holdings) and others, indicate that a criminal conspiracy was hatched from inception for obtaining / sanctioning of bank loan to M/s KAL (Kingfisher Airlines) in gross violations of established / prescribed procedures and M/s KAL had no intention for repayment of loan. Therefore, the entire outstanding loan amount is the proceeds of crime for the purpose of PMLA,” reads the chargesheet.
Charges Against Mallya
The chargesheet states that the loan money was laundered by Mallya, with the help of shell companies that were headed by a board of dummy directors, who were all controlled by him. Additionally, he had purchased properties in the name of these said companies.
“There are movable/immovable assets in these companies in the form of shares of public listed companies and landed properties,” as mentioned in the chargesheet.
How Was the Money Laundered?
1. Corporate Jet:
The chargesheet says that Mallya’s Kingfisher Airlines had acquired a Corporate Jet, for the official purpose of Non-Scheduled Air Transport Services [Passenger] operations, which would also be used by Mallya, the company’s Chairman and senior employees of UB Holdings.
It was also meant to be used for VVIP tourism and chartered trips to places across the world, as a result of which there would be surplus income from the jet’s operations and services.
However, it is alleged that the jet was instead used as a personal carrier for Mallya and his friends. To this end, funds to the tune of Rs 45.42 crore (approx) were used for payments towards renting this corporate jet.
2. Veling Narian Limited:
The income tax department has alleged that Mallya had also taken a part of the loan money abroad through “over-invoicing of lease rent” for an aircraft that he had purchased from Veling Narian Ltd, a Mauritius-based company for Kingfisher Airlines.
The CEO of this company, Hitesh Patel, was coincidentally an ex-employee of Kingfisher Airlines. According to the chargesheet, although Kingfisher took flights on lease from various companies, the rent it paid to Veling was significantly higher (about 65 percent more) than the amount they were paying to other companies for aircrafts of similar designs.
3. Force India Formula One Team (FIF1TL):
The chargesheet further alleged that Mallya had diverted a part of the bank money, roughly worth Rs 255 crore, to UK. On paper, Kingfisher Airlines had entered into an agreement with FIF1TL for a sponsorship agreement, for promotional purposes. Through this, the bank money was transferred into account of FIF1TL, in this guise.
“Payments were routed through the bank a/c of M/s KAL held with HSBC Plc London to conceal and avoid scrutiny of bankers as the borrowings of M/s KAL had increased manifold during the ensuing period,” the chargesheet said.
4. Royal Challengers Bangalore:
According to the chargesheet in 2008, Mallya had transferred about Rs 15.9 crore of the loan money from Kingfisher Airline's account, registered with Deutsche Bank, into the account of his IPL team Royal Challengers Bangalore.
“Thus, Dr Vijay Mallya deliberately & intentionally diverted the loan amounts from the bank a/cs of M/s KAL to other bank a/cs of his interest. The State Bank of India, consortium leader, has calculated the amount to the tune of Rs 9,990.07 crore (including applied interest) as of 15 May, 2018,” it said.
(To read the full chargesheet, click here)