Mumbai: The investigation into an alleged fraud at the now defunct Kingfisher Airlines Ltd has run into an unlikely hurdle: the airline’s books of accounts have vanished.
Executives of the grounded airline have informed officials of the Serious Fraud Investigation Office (SFIO) that a vendor had carted away the computers and servers that stored the financial accounts of the airline for non-payment of dues.
The airline claims that it has no backup of the files, two SFIO officials said, requesting anonymity.
The missing data has resulted in a major roadblock in the investigations into Vijay Mallya-promoted Kingfisher Airlines, which collapsed in 2012.
Mallya, who left the country as creditors approached the courts to recover over ₹ 9,000 crore owed by the airline, has declined to return to India claiming that he fears an unfair trial.
Demanding his return are at least five law enforcement and judicial bodies in India—the Supreme Court, the Enforcement Directorate (ED), the service tax department, SFIO and the income-tax department.
Mallya, 60, who presided over a liquor empire until a few years ago and was ranked the 45th richest Indian by Forbes in March 2012 with a net worth of $1 billion, was summoned by the ED in April.
SFIO, which works under the ministry of corporate affairs, is seeking details from former employees of the airline, lenders and audit firms about loans taken out by Kingfisher Airlines and the collateral for these.
“It was rather strange when the top management representatives of Kingfisher Airlines informed us that the airline has lost its books and accounts as vendors pulled out the system which had the accounts. The airline executives claimed that they never had a backup," said one of the SFIO officials cited above.
ALSO READ: ED probing forex violations in United Spirits’s Whyte & Mackay deal
The second official said the investigation has been delayed owing to the disappearance of the books of accounts. “However, we are seeking details from lenders and all financial institutions involved with Kingfisher Airlines. We are going ahead with questioning the top officials," he added.
A UB Group spokesperson declined to comment on the development or identify the IT vendor.
Shriram Subramanian, founder and managing director at proxy advisory firm InGovern Research Services Pvt. Ltd, said investigative agencies have the power to hold the company and its officers accountable for any missing data.
“The company can claim anything they want. Our investigative agencies are very lax, and don’t display any sense of urgency in ring-fencing systems and data related to any case," Subramanian said.
According to the Companies Act, a company is required to maintain books of accounts for a period of at least eight years. However, accountants advice that the books of accounts should be retained for more than eight years as the accounts can be opened even after that period for assessment by tax authorities.
ALSO READ: DRT to extend Vijay Mallya’s hearing beyond Supreme Court deadline of 9 July
If the company’s claims are true then it would be in violation of the Companies Act as the airline was grounded in 2012 and accounts have not been maintained for the mandatory eight-year period. SFIO has written to Mallya’s counsel requesting his personal presence to settle the issues and has sought the view of the ministry of corporate affairs on the matter.
“It is absolutely rubbish—a company of the size of Kingfisher Airlines which was operating an airline, no less, cannot claim that they do not have a backup of books of accounts. If this is what the company is claiming then the situation is far murkier than what meets the eye and was initially thought," said Amarjit Chopra, a former president of the Institute of Chartered Accountants of India.
ALSO READ: Kingfisher Airlines saga: SFIO seeks loan details from banks
Mallya in a 12 June statement said that Kingfisher Airlines had provided full details supported by copies of bank statements and Swift (a global payments network) copies showing that the funds were utilized for legitimate business purposes, in a reply to an allegation that the business tycoon had siphoned off funds.
Mallya had also said that if the ED wishes to expand its scope to include all banks, “Kingfisher Airlines will be only too happy to provide full details and cooperate in the investigation".