Vijay Mallya leaves for foreign climes even as banks move court
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Mumbai: UB Group’s former chairman Vijay Mallya has left India even as a consortium of banks and investigative agencies were closing in on him, two persons close to the development said.
The lenders were trying to prevent Mallya from leaving the country. They had also got a Bangalore debt court to temporarily halt payments from Diageo. But Mallya may have outsmarted them by leaving India. He may also have got a significant part of the payment from Diageo, the Times of India reported Wednesday.
Mint couldn’t immediately confirm this.
According to terms of payment outlined by Diageo, payment of $40 million was to be made immediately, with the balance being payable over the next five years.
A person close to the development said Mallya had left for London and may head for other foreign destinations even as his lawyers are battling several cases in India. This person said Mallya is talking to many leading lawyers to wriggle out of the current situation and safeguard the money he is to get from Diageo Plc.
He, however, denied that Mallya had fled.
“This is not a case of absconding. He is trying to buy time from banks and is looking for a one-time settlement. Banks may have to take a haircut and settle the issue rather than fighting a prolonged legal battle,” the person said.
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A UB Group spokesperson said he is unaware of any such development. Mint could not immediately contact Mallya.
Another person close to the development said Mallya is in more trouble with the corporate affairs ministry starting an investigation as the government feels there is a need to make an example of somebody. “Mallya is in touch with three high-profile lawyers in Mumbai. He has seen several such issues. However, this time it is not that easy,” the person said.
Thirteen creditor banks moved the Supreme Court on Tuesday to restrain UB Group chairman Vijay Mallya from leaving the country, as they seek to recover Rs.9,091 crore in loans owed by his grounded Kingfisher Airlines Ltd. The court will hear the application, which increases pressure on Mallya to settle his dues, on Wednesday.
The Serious Frauds Investigation Office (SFIO), under the ministry of corporate affairs launched an investigation into suspected diversion of funds and other financial irregularities at Kingfisher Airlines, which was grounded in 2012 under the weight of heavy debt, accumulated losses, and after bouts of labour unrest.
Union corporate affairs minister Arun Jaitley said in a written reply to a Rajya Sabha question that the investigation is “under progress” and that the SFIO is looking at alleged “diversion of funds and financial reporting frauds”.
Meanwhile, Ravi Nedungadi, 59, a long-time Mallya aide and president and chief financial officer at UB Group and has resigned.
“Nedungadi has taken a decision to retire couple of months ago. He will be around for couple of months. Nedungadi’s retirement has nothing to do with current mess created by Mallya,” the first person quoted above said.
The retirement age at UB Group is 58, which can be extended up to 60.
Nedungadi is thinking of writing a book, but not on the UB Group, the person said.
“Nedungadi and Mallya know each other for three decades and Nedugadi was instrumental in sewing many high-profile leveraged buyouts for the UB Group. However, Nedungadi was not associated with the Mallya-Diageo talks,” this person added.
Banks and multiple enforcement agencies moved swiftly against Mallya after Diageo on 26 February announced a sweetheart deal under which Mallya would receive $75 million, in return for stepping down as chairman of United Spirits Ltd and entering into a non-compete agreement with the British distiller.
The deal also absolved Mallya of all liabilities stemming from suspected financial irregularities at USL under his watch.
The Enforcement Directorate has opened a money laundering investigation against Mallya in connection with alleged default on a Rs.900 crore loan from IDBI Bank Ltd. The Central Bureau of Investigation had earlier moved against Kingfisher Airlines executives and IDBI Bank officials in the case.
The service tax department has moved the Bombay high court requesting that proceedings earlier initiated against Mallya under the Code of Criminal Procedure be speeded up.
Mallya has said previously that he has no plans to flee and was in talks for a one-time settlement to resolve Kingfisher Airlines’s debt.
Fleeing to a foreign destination will not help Mallya, according to a senior official at the Enforcement Directorate.
“It does not bother us. Mallya can be easily located and can be been directed to appear in person. However, we are yet to summon Mallya. The directorate is examining relevant documents of Mallya’s transactions before doing so,” the official said requesting anonymity.
The Enforcement Directorate has opened a money laundering investigation against Mallya in connection with alleged default on a Rs900 crore loan from IDBI Bank Ltd. The official had clarified that the directorate is not looking at financial irregularities conducted by Kingfisher Airlines Ltd at IDBI Bank.
The Central Bureau of Investigation (CBI) had earlier moved against Kingfisher Airlines executives and IDBI Bank officials in the case.
“CBI is looking into the IDBI-Kingfisher case,” he said.
Meanwhile, Bombay High Court will hear a case agains Mallya filed by the service tax department on 11 March. The service tax department haa moved the Bombay high court requesting that proceedings earlier initiated against Mallya under the Code of Criminal Procedure be speeded up.