Mumbai: The Enforcement Directorate (ED) will register a fresh case against Vijay Mallya and Kingfisher Airlines Ltd (KFA) to investigate whether they laundered money taken as loans, two ED officials familiar with the development said on condition of anonymity.
The fresh probe is in addition to the Rs.900 crore IDBI Bank loan default case that the agency is currently investigating.
ED’s fresh case against Mallya and Kingfisher Airlines is based on a complaint filed by a State Bank of India-led (SBI-led) consortium with the Central Bureau of Investigation (CBI), said one of the two ED officials cited above. Both spoke on condition of anonymity.
According to a 15 August Press Trust of India report, CBI has registered a case against Mallya and the airline he promoted on the basis of the complaint filed by India’s largest public sector lender. SBI has alleged that Mallya sought to recast his loan repayments without disclosing all pertinent information. SBI, and the 17-lender consortium it leads, say that Kingfisher Airlines owes them Rs.9,000 crore.
“The fresh case will be clubbed together in the PMLA (Prevention of Money Laundering Act) probe against Mallya and others in the Rs.900-crore loan fraud of IDBI Bank,” added the first ED official cited above.
A spokesperson for Mallya’s UB Group declined comment.
“Generally, ED takes cognizance and registers a case after it receives a complaint or another investigative agency registers a case. In this instance, CBI has registered a fresh case; ED is taking cognizance of that,” said the second person. In the IDBI Bank matter too, the CBI had first registered a case.
ED’s new case will enable the investigative agency to attach more personal properties of Mallya, who has been labelled as a so-called proclaimed offender by a special money laundering court.
The 17 banks had extended a loan of Rs.6,900 crore to the defunct airline after a second round of debt restructuring in 2010. Out of this, SBI, with Rs.1,600 crore, has the largest exposure. The banks recalled the loan in February 2013, but could recover only around Rs.1,100 crore after selling pledged shares of UB Group companies.
“ED has identified assets worth over Rs.6,000 crore for attachment. With a larger case of loan default (in terms of amount) under investigation, it will be easier for the agency to procure attachment orders,” said the second person.
On 29 July, a special PMLA court declared Mallya a ‘proclaimed offender’ after he failed to appear before it. A person against whom an arrest warrant has been issued can be declared a ‘proclaimed offender’ if the court has reason to believe that he/she is absconding.
An ED official said that further attachment of Mallya’s personal properties is part of the agency’s strategy to pressure him to return to India.
Mallya left the country in early March as creditors closed in on him to recover money owed by Kingfisher Airlines, which was grounded in 2012 under the weight of heavy debt and accumulated losses and faced with employee unrest over unpaid salaries. Mallya has declined to return to India, claiming that he fears an unfair trial.
At least five law enforcement and judicial bodies in India—the Supreme Court, ED, the service tax department, Serious Fraud Investigation Office and the income-tax department—are demanding his return. Last month, the Supreme Court agreed to hear a contempt petition against Mallya.
ED has already identified some pledged shares and immovable and movable assets of Mallya and his family that can be seized as part of its plan.