High Troubles For Mallya, ED traces cash trail
New Delhi: The noose is tightening around Vijay Mallya, the former liquor baron who is now holed up at his palatial home on the outskirts of the London. A second chargesheet by the Enforcement Directorate (ED) has confirmed the trail of illegal cash Mallya transferred to his accounts across global tax havens.
The ED has charged Mallya, UB Holdings and the now-defunct Kingfisher Airlines along with others, charging them with laundering a whopping Rs 9,990 crore which they had fraudulently availed as loan from State Bank of India-led consortium of 17 banks. What is shocking is that the chargesheet says the flashy tycoon, who continues to deny all allegations, used his Force India Formula 1 Team - a private company registered in London - and his IPL team, Royal Challengers, to launder cash.
Last year, the ED charged him and eight others for defrauding IDBI Bank of Rs 900 crore and laundering the cash.
As per the latest chargesheet, Mallya-controlled Kingfisher Airlines took a loan of Rs 6,027 crore - it eventually became Rs 9990 crore with interest - on Mallya’s personal guarantee, along with corporate guarantee of UB Holdings. Added to this was an “inflated" brand guarantee of Kingfisher Airlines. The loan, taken for operational expenses of Kingfisher Airlines, was used for other purposes, including purchase of an aircraft for Mallya's personal use.
The charges are serious. ED claimed Mallya laundered cash with the help of dummy directors controlling shell companies which were - actually - controlled by him. Mallya also procured properties in name of these companies. In one such case, Mallya over-invoiced lease rent for aircraft which he procured from a Mauritius-based company for Kingfisher Airlines. The CEO of the Mauritius company, Veling Narian Ltd, Hitesh Patel, the ED found, once worked at Kingfisher Airlines.
The chargesheet stated that Kingfisher took flights on lease from various companies, and the rent paid to Veling was much higher than what they were paying to other companies for aircraft of similar specification.
The ED said Mallya Rs 225 crore, a part of the cash he got from the banks to UK, eventually to the account of his F1 team in the guise of advertising and promotional expenditure. Another Rs 15.9 crore was shifted out of Kingfisher Airline's account with Deutsche Bank into the account of Royal Challengers, Bangalore.
Mallya, who spent a lifetime, building a reputation as India’s professed King of Good Times, must answer the charges in a London court, else return home.
Mallya, who once hired Lionel Richie and Enrique Iglesias for his birthday parties, is lying low in London. He told reporters outside a London court sometime ago that he will fight “till I last”. He left for Britain in March 2016, but India canceled his passport the next month, after a court in Mumbai issued a warrant for his arrest. India sent Britain an official request for Mr. Mallya’s extradition on Feb. 8, 2017.
Instances of diversion Of Loan Amounts :-
M/s KAL had acquired a Corporate Jet to be used for Non-Scheduled Air Transport Services [Passenger] operations, obtained on the grounds that the same will be used by Dr. Vijay Mallya, Chairman and Senior employees of M/s UB Group. Further, it would also be used for VVIP tourism and chartered trips to various destinations world over and there would be surplus income from the operations of the corporate jet. However, the said jet was never used for the said purpose & mainly used as a personal carrier for Dr. Mallya, as it catered to his family members and his friends. For the purpose of payments towards Corporate Jet MSN 2650, funds to the tune of Rs. 45.42 Crore (approx) was diverted for making payments towards the rental lease of Corporate Jet.
Veling Narian Ltd.
M/s KAL was using two aircrafts of M/s Veling Limited on very high lease rental of more than 65% than those provided by other aircraft leasing companies of the same class of aircraft. Thus, it shows that amounts siphoned off by way of over invoicing and were paid to M/s Veling Narain Ltd., in excess than any other owner/lessor of aircrafts. There are suspected similar over-invoicing in case of all lease aircrafts of other specifications out of the outward remittances made by M/s KAL towards lease rentals & other outward remittances are to the tune of Rs. 3432.40 Crore (approx). Letter of Request [LR] have been issued seeking evidence in the matter.
Force India Formula One Team Ltd.:-
Force India Formula One Team Limited [FIF1TL] was a related party of UB Group and in turn to M/s KAL, as Dr. Vijay Mallya and Sh. A.K.R. Nedungadi were the directors of FIF1TL since 2009. M/s Watson Limited, the promoters cum a major shareholder of M/s UBHL, infact is a major shareholder of FIF1TL also. FIF1TL is a private company registered in England, engaged in the field of Formula One racing and inter alia operates a Formula One racing team styled “Force India Formula One Team”. M/s KAL had entered into an agreement dated 11.02.2008 with FIF1TL for sponsorship agreement for the purpose of promotion/displaying the brand “Kingfisher”. M/s KAL had made payments aggregating to GBP 30,348,452,25 @ INR 84=Rs. 254,92,69,989/- to M/s FIF1TL. 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. Instances were noticed that transfers have been made from the Axis bank a/cs of M/s KAL to the HSBC Bank, London. M/s KAL had instructed Axis Bank, to transfer the foreign currencies to their HSBC Bank Plc A/cs m. Such as other operating expenses in connection with our flights. However, the amounts on their being credited to the HSBC Bank Plc., London were immediately remitted to FIF1TL, having their bank a/c with Fortis Bank SA. Dr. Vijay Mallya has surreptitiously transferred funds of M/s KAL giving a false purpose of remittance. M/s KAL & thus diverted the funds.
Payments to IPL Team – Royal Challengers, Bangalore:-
The Bangalore franchise of IPL was purchased by Vijay Mallya which runs in the name of “RCB”. Loan amount of Rs. 15.90 Crore was siphoned off and diverted from the bank a/c of M/s KAL held with Deutsche Bank to M/s Royal challengers Sports Pvt. Ltd., 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. 9990.07 Crore (including applied interest) as on 15.05.2018.
During the course of investigation, properties worth value of Rs. 4234.84 Crore in the form of movable and immovable properties belonging to M/s UBHL, Dr. Vijay Mallya and companies controlled by him through dummy directors, were provisionally attached vide PAO No. 16/2016 dated 03.09.2016, as the proceeds of crime generated or property involved in money laundering has been either routed/transferred abroad or utilized. Hence, the property derived directly or indirectly out of proceeds of crime [PoC] were not available for attachment under PMLA. By concealing the assets instead of non-payment of loan amount and diverting the loan proceeds out of India, Dr. Mallya and M/s UBHL have benefitted from the same and hence, they are involved in the offence of money laundering. Accordingly, the properties controlled by them directly or indirectly are also liable for attachment under the provisions of PMLA, 2002, invoking the concept of “value of any such property” and present Prosecution Complaint has been filed against Dr Vijay Mallya ,M/s KAL and M/s UBHL.