Mallya’s Troubles Mount: ED May Widen Probe to Other Countries

ED to send Letters Rogatory to foreign countries under PMLA case against Vijay Mallya.

The Enforcement Directorate (ED) is likely to send Letters Rogatory to an undisclosed number of foreign countries to collect information on the money allegedly siphoned off by liquor baron Vijay Mallya after raising money through bank loans for Kingfisher Airlines.

The ED’s case against Mallya and Kingfisher Airlines was registered under the Prevention of Money Laundering Act (PMLA) on an existing FIR filed by the CBI in July 2015 (more on that later).

ED will send Letters Rogatory to different countries to get information on the money laundered abroad by Mallya and his company.

Senior Officer, Enforcement Directorate

Why Money Laundering?

The ED is likely to question Mallya soon after gathering enough evidence from abroad. After Mallya, the directorate is likely to question Kingfisher Airlines Chief Financial Officer A Raghunathan and senior officials of the IDBI Bank.

It is alleged that Kingfisher diverted a significant part of the loan amount to clear existing debt with other banks/lenders. A major chunk was transferred to Axis Bank and used for foreign remittances towards lease rentals, buying aircraft parts etc. An amount of Rs 3.45 crore was put into the bank account of Kingfisher Airlines n London. Since these remittances happened outside the country, the ED registered a case under the PMLA.

The CBI Case

The CBI had filed its July 2015 FIR suo motu to investigate why the IDBI Bank had lent Rs 900 crore to Kingfisher Airlines when it knew the carrier would fold up. The CBI suspects some IDBI Bank officers approved loans to Kingfisher Airlines without necessary procedure leading to the loss of Rs 900 crore. The CBI has already questioned Mallya under the Prevention of Corruption Act.

The money was disbursed to Kingfisher in tranches of Rs 200 crore and Rs 750 crore between October and November 2009. IDBI Bank sanctioned the loan despite the fact that Kingfisher did not satisfy norms stipulated in the bank’s Corporate Loan Policy.

CBI investigation reveals that the Rs 900 crore loan was released after it was cleared by IDBI Bank officials, namely former Chairman and Managing Director Yogesh Agarwal along with board members BK Batra, R Bansal and SKV Srinivasan.