UB Group denies siphoning money to buy foreign properties

Mumbai: Vijay Mallya-led UB Group on Sunday denied that it has siphoned money to buy properties outside India and termed efforts by the Enforcement Directorate to seek a non-bailable warrant against him as erroneous and unjustified.

In a late night statement, UB Group said the allegation made by the Enforcement Directorate before a special court that they have stumbled upon evidence that ₹ 430 crore was transferred overseas for property acquisition is strenuously denied.

The Enforcement Directorate told a special court—Prevention of Money Laundering Act (PMLA) court—on Saturday that Mallya has invested about half of the ₹ 950 crore loan taken from IDBI Bank in properties outside India.

The PMLA court was hearing a plea by the Enforcement Directorate seeking a non-bailable arrest warrant and a red-corner notice against Mallya who owes over ₹ 9,000 crore to lenders.

The PMLA court reserved its order until Monday.

“The audited accounts of Kingfisher Airlines including for the year ended 31 March 2010 show all foreign exchange transactions which includes funds borrowed from IDBI Bank used for legitimate business purposes only,” the UB Group statement said.

The statement said: “We are shocked at the allegation made by the Enforcement Department before the PMLA Court for the very first time”.

Last month, the Enforcement Directorate registered a case under PMLA to trace the suspected diversion of a ₹ 950 crore loan granted to Kingfisher Airlines by IDBI Bank Ltd.

The Enforcement Directorate’s counsel Hiten Venegaonkar told the PMLA court that Mallya siphoned off ₹ 430 crore from the IDBI bank loan under heads such as aircraft lease rent, import of spare parts and aircraft maintenance services. The loan was given to his now-grounded Kingfisher Airlines Ltd.

He left India on 2 March after lenders to his Kingfisher Airlines intensified efforts to recover loans.

Mallya has skipped three summons from the Enforcement Directorate ordering him to appear personally. He has sought an extension till May for appearing in person.

However, the Enforcement Directorate requested the ministry of external affairs to suspend his passport and approached the PMLA court for a non-bailable arrest warrant.

“Multiple investigations have been going on since July 2015 and this allegation has never been made. In order to explain foreign exchange remittances all of which have been fully accounted for, we will provide full details in the next few days,” the UB Group said on Sunday.

“Suffice it to say that the basis of seeking a Non Bailable Warrant against our chairman is erroneous and unjustified,” it added.

On Friday, stepping up pressure on Mallya, the government suspended his diplomatic passport for four weeks on the request of the Enforcement Directorate, which is probing money laundering allegations against him.

“Mallya has been asked to respond within one week as to why his passport should not be impounded or revoked under Section 10(3)(c) of the Passports Act, 1967. If he fails to respond within the stipulated time, it will be assumed that he has no response to offer and the MEA will go ahead with the revocation,” the ministry of external affairs spokesperson said on Friday.

Mallya was issued a diplomatic passport by the Delhi regional passport office by virtue of him being a Rajya Sabha member of Parliament.

Last week, the Supreme Court directed Mallya to disclose all assets held by him and his family, after a consortium of creditors spurned his offer to repay ₹ 4,000 crore to settle the debts of his grounded airline.

The apex court directed Mallya, who has offered to pay an additional ₹ 2,000 crore if he wins a pending lawsuit, to disclose all movable, immovable, tangible and intangible assets owned by him, his wife and children.

The directive came after a consortium of 17 banks led by the State Bank of India, which are owed a combined ₹ 9,091 crore by Kingfisher Airlines, informed the court that it had unanimously rejected Mallya’s offer but was willing to join negotiations for a settlement.