Vijay Mallya used Kingfisher Airlines to launder Rs 9990 crore, reveals ED chargesheet

first_imgFugitive liquor baron Vijay Mallya used Kingfisher Airlines to launder Rs 9,990 crore, the second chargesheet filed by the Enforcement Directorate (ED) revealed.The chargesheet claimed that Mallya entered into a criminal conspiracy, cheated the consortium of banks by way of over invoicing, misrepresentation in diverting the outward remittances, layering and integration through a complex web of financial transactions.The ED filed a second chargesheet against Vijay Mallya, Kingfisher Airlines Ltd (KAL) and United Breweries (Holding) Ltd under the Prevention of Money Laundering Act (PMLA).Vijay Mallya, CEO, Chairman and controller of KAL, knowingly and intentionally participated in criminal activities and acquired Rs 9,990.07 crore by conspiring to cheat the lender banks in the consortium of banks, in connivance with the other officials of KAL.According to the chargesheet, Mallya has been accused of generating the proceeds of crime (PoC) of property involving in money laundering, and carried out criminal activities related to scheduled offences as defined under Section 2(1)(u) of the has reviewed the 5,300 page-long second chargesheet filed in the case. The chargesheet claims that Vijay Mallya used KAL as a means to launder money.”KAL was the entity fully controlled by Vijay Mallya, which was used a vehicle to launder the proceeds of crime, so generated,” the chargesheet stated.United Breweries Holdings Ltd (UBHL) has been charged for knowingly indulging itself in assisting in money laundering, as it had given corporate guarantees to the consortium of banks in case there is a default in repayment of loan amount by KAL.advertisement”UBHL as part of conspiracy, deliberately and intentionally did not honour the same and filed a suit before the Bombay High Court after a period of three years stating that the guarantee was obtained under duress,” the chargesheet said.How Mallya diverted money?Primarily, the modus operandi for siphoning off money abroad was by over-invoicing the lease rent and other payments. Mallya over-invoiced import of services to around 60 per cent.He also used to transfer funds from his foreign bank accounts such as HSBC Bank, London, giving false declaration about the purpose of remittances as operational expenses and then diverting these funds to his sister concern Force India Formula One Team Ltd, owned by Watson Ltd.The financial transactions (or laundering of money) trailed by ED includes:1. Deliberate siphoning of funds to the tune of Rs 45.42 crore (approx) was diverted for making payments towards the rental lease of Corporate Jet which was exclusively used by Vijay Mallya.2. An amount of Rs 3,432.40 crore has been siphoned off, towards lease rental for aircrafts by way of over invoicing and other payments.For instance, Veling Narain was paid Rs 102 crore for lease rentals of two aircrafts ie ATR 72-500, which were in the name of Veling Narain Ltd and Veling Sacheedanand Ltd, based in Mauritius.The chargesheet claimed that one of the senior employee of Veiling Narain namely Hitesh Patel, being an ex-employee of UB Group confirmed siphoning off/diversion of funds.3. A loan amount of Rs 15.90 cr was siphoned off and diverted from the bank account of KAL held with Deutsche Bank to Royal Challengers Sports Pvt Ltd, Bangalore.The investigation revealed that KAL from its bank account held with State Bank of India transferred an amount of Rs 24.30 crore to the bank account of KAL held with UCO Bank.Further, out of the said amount, around Rs 16 cr was transferred to the bank account of KAL held with Deutsche Bank in 2009. Thereafter, from the said amount of Rs 16 crore, an amount of Rs 15.90 crore was transferred to Royal Challengers Sports Pvt Ltd.4. An amount of Rs 2.80 crore were diverted towards repayment of earlier loan of ICICI Bank contrary to the purpose of the loan amounts taken from banks.With this, it got established that Vijay Mallya through his company KAL was using the loans obtained from one bank to offset the loan of another bank without declaring the same as a purpose to obtain the loan in their loan application.Mallya misled Axis Bank to divert money in Formula OneAs per the chargesheet, between 2008-2012, KAL made payments aggregating to Rs 255 crore to Force India Formula One Team Ltd (FIF1TL).To make it happen, Mallya misled the banks on the false pretext of transferring the funds for legitimate utilisation and instead diverted and siphoned off the money to FIF1TL in guise of advertising and promotional expenditure.Investigation revealed that payments were routed through the bank account of KAL held with HSBC Plc. London to conceal and avoid scrutiny of bankers. Instances were noticed where transfers were made from the Axis Bank accounts of KAL to the HSBC Bank in London.advertisementMallya misled Axis Bank by saying, “As you are aware, we have created a branch office in London and this account has been opened for making local payments in UK such as fuel, airport charges, hotel expenditure and other operating expenses in connection with our flights to London.”Instead, the amount being credited to the HSBC Bank, London were immediately transferred to Force India who had their bank account with Fortis Bank.PoC worth Rs 9,990 croreGoing back, Vijay Mallya and KAL had obtained the loan amounts by way of gross misrepresentation of facts to the banks.The lead consortium of banks ie SBI has reported that the total outstanding loan amount is Rs 4,930.34 crore (excluding unapplied interest). These are the proceeds of crime in terms of Section 2(1)(u) of PMLA, 2002.In addition, an amount of Rs 695.50 crore was part of share of loan of IDBI Bank Ltd for which a separate case has been registered and investigated. Thus, after deducting the amount of Rs 695.50 crore from the total estimated PoC, the amount comes down to Rs 4234.84 crore.Moreover, the Debt Recovery Tribunal (DRT) in its order dated January 2017, had made KAL, UBHL, Vijay Mallya and Kingfisher Finvest (India) Ltd – (a 100 per cent subsidiary of UBHL) jointly and severally liable for an amount of Rs 6203 crore with further interest of 11.50 per cent.Thus, the SBI has calculated the total amount of proceeds of crime to the tune of Rs 9990.07 crore as on May 2018.READ | Vijay Mallya loses USD 1.55 billion assets case in UK courtREAD | Exclusive: How Vijay Mallya splurged public money on IPL teamWATCH | Emails with India Today incriminate Vijay Mallya before his extradition hearinglast_img read more