New Delhi: The Central Bureau of Investigation (CBI) launched a criminal investigation followed by raids on Vijay Mallya and his now defunct company Kingfisher Airlines for an alleged loan fraud, involving Rs 900 crore from IDBI Bank, adding to the string of investigations against the liquor baron and his company.
The agency teams searched five premises including Mallya's residences and Kingfisher office premises in Mumbai, Goa and Bengaluru and found what CBI sources called 'incriminating' documents.
The agency had earlier this week filed a case against Mallya, Kingfisher Airlines Limited, its chief financial officer A Raghunathan and some officials of IDBI Bank for criminal conspiracy, criminal breach of trust and under the Prevention of Corruption Act.
Mallya's role, top sources claimed, is being probed as the head of the company as initial investigation have revealed misuse of bank funds. The money, taken from IDBI bank, was shown as used for leasing aircraft from overseas companies based in tax havens like Cayman Islands and Mauritius, said sources. The agency has found that high rents were paid to the companies in these countries using bank loan funds for which invoices were inflated.
A senior CBI officer told Times of India that "it's not only IDBI bank which provided loans to Kingfisher, which was misused. Loans taken from other banks are also on the radar".
CBI's move marks yet another low in Mallya's career. The flamboyant business tycoon, known for his love for racehorses, yachts and villas besides calendars of his liquor companies, successfully styled himself as the "king of good times". However, he seems to have hit a trough, having been forced to shutter his Kingfisher airlines. Wrong business calls have seen him losing control of his liquor business as well as confidence of investors.
Mallya's image has also taken a hit because of his defiant persistence with "good times" ways at a time when employees of Kingfisher Airlines went without salaries and the amount taken for them was allegedly never passed on.
Mallya came to be widely regarded as a symbol of the excesses of crony capitalism.
The searches show that the immunity of the controversial businessman, once known for his contacts across the spectrum, may have worn thin.
CBI will approach Cayman Islands and Mauritius to investigate if the companies which provided aircraft to Kingfisher were dummy companies. It is also probing whether the actual lease rent paid was lower, while the invoices generated were for higher amounts. The officer alleged that some of the companies in these countries had the same addresses.
CBI said Kingfisher was given loan of around Rs 900 crore by IDBI bank officials allegedly in collusion with Mallya and Kingfisher Airlines' CFO Raghunathan in violation of the stipulated norms.
Interestingly, IDBI bank officials sanctioned the loans of Rs 900 crore to Kingfisher very swiftly although an internal audit of bank suggested that Kingfisher is a bad bet and its net credit rating was poor. "We found that there was a very quick sanction of short term loan by IDBI, which later went bad," said a senior CBI officer.
The debt-laden airlines stopped operations in October 2012.
So far, there is no evidence to suggest that IDBI funds were used for personal expenses by Mallya but the agency will probe if payments for leasing of his personal 22-seater Airbus aircraft was done from this money.
CBI sources added that they will investigate whether Mallya influenced the early disbursal of funds in Kingfisher's account by calling IDBI officials. It plans to summon Mallya soon for questioning.
The CBI probe is part of a larger bank non-performing assets (NPAs) issue involving several public sector banks and private companies, which was started last year. More than 26 FIRs and several preliminary enquiries, including one on Kingfisher Airlines-IDBI loan, were lodged last year by the Bank Securities & Fraud Cell of CBI.
During the course of the investigation in the PE against Kingfisher, CBI had examined several IDBI officials and some executives of the company, said sources. After finding irregularities, an FIR was registered this week.
In Kingfisher's case, CBI says, "It was first exposure to the bank. There was no need for the bank to take the exposure outside the consortium when already other loans were getting stressed."
The consortium of 17 banks had an outstanding of over Rs 7,000 crore on loans from Kingfisher with State Bank of India having the highest exposure of Rs 1,600 crore.
A UB Group spokesperson said the CBI officials carried out searches at the company's premises in Bangalore, Goa and Mumbai. "The CBI officials visited UB Group premises in Bangalore, Goa and Mumbai in the course of an investigation regarding a loan facility availed by Kingfisher Airlines. The company cooperated with the officials and provided the necessary documents and will continue to offer co-operation," UB Group spokesperson Sumanto Bhattachrya said.
