The Enforcement Directorate on Saturday provisionally attached assets worth Rs. 6,630 crore in connection with a fresh case of alleged cheating registered earlier this month by the CBI against businessman Vijay Mallya and his two companies. The agency has so far attached assets worth over Rs. 8,000 crore.
The on-paper value of the assets attached under the Prevention of Money Laundering Act is Rs. 4,234.84 crore. They include shares of United Spirits Limited, United Breweries Limited and Macdowell Holding Co. worth Rs. 3,635 crore held by Mr. Mallya, United Breweries Holding Ltd and his controlled entities.
Mandwa Farm House, worth Rs. 25 crore at Alibaug in Maharashtra, flats in Kingfisher Tower in Bengaluru, worth Rs. 565 crore and fixed deposits of Mr. Mallya with HDFC for Rs. 10 crore have also been attached.
Based on a complaint filed by a State Bank of India-led consortium, the CBI had last month registered a fresh case of alleged cheating and conspiracy against Mr. Mallya and his companies Kingfisher Airlines and UBHL. The complaint alleged that the accused persons cheated the bank of more than Rs. 6,027 crore.
The amount was loaned to the now-defunct Kingfisher Airlines on personal and corporate guarantees of Mr. Mallya and UBHL, in addition to collateral securities of the Kingfisher Airlines’ brand and its assets.
“On their request, the loans were recast in December 2010 and the total outstanding was finalised as Rs. 5575.72 crore, subject to regular debt serving and adherence to agreed repayment schedules. However they failed to repay as the agreement and did not even honour the guarantees executed by them,” said an ED official.
Instead, it is alleged, Mr. Mallya and UBHL moved court against the banks stating that their guarantees were taken through coercion. Therefore, the consortium finally filed a complaint with the CBI on August 12 this year.
Based on the CBI case, the ED launched fresh money laundering investigations and has now attached the assets. In connection with another case registered by the CBI last year pertaining to Rs. 900-crore IDBI Bank loan default, the Directorate had earlier attached properties worth Rs. 1,411 crore.
ED probe has revealed that over Rs. 3,500 crore of the loan funds were allegedly remitted outside India on the pretext of payments of lease rentals, repair & maintenance works and other business activities. However, the accused persons failed to provide proper lease agreements to that effect and many irregularities in these payments were noticed by the agency.
“Investigation by the ED also revealed that Mr. Mallya created a complex web of shell or investment companies in the name of his family members and employees with dummy directors. Although these companies do not have any business activities and no independent source of income, they are holding substantial movable and immovable properties,” said the official.
The agency alleges that Mr. Mallya, while submitting the statement of his personal assets to the consortium, did not disclose in full his properties in India and overseas, as well as his interests in the companies being controlled directly or indirectly by him. There were substantial movable properties in the form of shares of various public limited companies held in his name and that of UBHL, who had given personal and corporate guarantees.
“A large number of shares were also being held in the name of various other group companies controlled directly or indirectly by Mr. Mallya. Hence, it appeared that even though sufficient funds were available with the promoters of Kingfisher Airlines, Mr. Mallya and UBHL had no intention to repay the dues to the banks,” the official said.
The accused “deliberately and intentionally” kept the huge number of shares worth about Rs. 3,600 crore pledged with UTI Investment Advisory Services Ltd and other financial institutions without substantial underlying liabilities and thus, allegedly kept the consortium in dark.
Accordingly, the ED alleges that Mr. Mallya criminally conspired with Kingfisher Airlines and UBHL to obtain from banks the funds, of which a total principal amount of Rs. 4,930.34 crore still remains unpaid.