The Central Bureau of Investigation on Monday arrested former IDBI Bank Chairman Yogesh Agarwal and four of his erstwhile colleagues, besides the then Kingfisher Airlines CFO A. Raghunathan and three other former functionaries of the airline, in connection with the ₹900-crore loan default case.
The CBI also arrested former IDBI Bank Deputy MD B.K. Batra in the late evening.
DRT go-ahead
The arrests come days after the Debt Recovery Tribunal allowed a consortium of lending banks to initiate the process for recovering Rs. 6,203 crore at 11.5 % interest rate from Kingfisher Airlines promoter Vijay Mallya and his companies.
“Mr. Agarwal was arrested in Delhi and is being taken to Mumbai for further legal proceedings,” said a CBI official.
The arrested bank officials include former IDBI Bank deputy managing director B.K. Batra, former members of the bank’s credit committee, O.V. Bundellu and S.K.V. Srinivasan and then bank general manager R.S. Sridhar. The credit panel had sanctioned the loan.
The arrested airline functionaries include Shailesh Barkar, who served as Vice-President (Finance), and former Deputy General Managers Amit Nidkarni and A.C. Shah.
Searches at 11 places
The arrests were made following searches at 11 locations on the premises of the accused persons, including that of the absconding Kingfisher Airlines promoter in Delhi and Bengaluru.
The UB Group premises were also searched.
Taking suo motu notice of the alleged fraud, the CBI had registered the case against Mr. Mallya, the airline and the IDBI Bank officials in July 2015. Subsequently, the agency conducted searches and quizzed Mr. Mallya at least twice. Declared a proclaimed offender by a Mumbai court, the businessman is now in London. He flew out of the country in March last year.
The former IDBI chairman, now arrested in the case, had earlier served as Managing Director of the State Bank of Patiala and the State Bank of India. He joined the IDBI Bank in July 2007 and quit in 2010 to join as Chairman of the Pension Fund Regulatory and Development Authority.
According to the CBI, Mr. Agarwal and other accused bank officials played an active role in the sanction of loans to the ailing airline despite its poor credit rating. The FIR alleges that the company had moved an application for a corporate loan of ₹950 crore on October 1, 2009. Just five days later, the company CFO A. Raghunathan met the top bank official seeking release of a short-term loan of ₹. 150 crore.
“On the same day, a memorandum was put up to the credit committee [comprising the then CMD and two members] and the facility was sanctioned, though the company was having negative financials and a negative net-worth,” alleges the FIR.
A month later, the FIR mentions, Mr. Raghunathan wrote another letter giving reference of a meeting between Mr. Mallya and the bank’s CMD and again requested for an ad hoc release of ₹200 crore. The amount released in the process was later subsumed in the corporate loan. On November 27, 2009, the bank had released the corporate loan of Rs.750 crore.
Based on the CBI case, the Enforcement Directorate has launched a probe under the Prevention of Money Laundering Act and attached assets worth Rs.1,411 crore.
Last may, the CBI registered a fresh case against Mr. Mallya, Kingfisher Airlines and its holding company, United Breweries Holding Ltd and others for allegedly causing a loss of Rs. 6,027 crore to the State Bank of India-led consortium. Subsequently, the ED attached more properties worth Rs. 6,600 crore and also seized assets worth Rs. 1,620 crore under the Criminal Procedure Code after the businessman was declared a proclaimed offender.
