Mallya Faces Money Laundering Case, Banks Lock $75 Million

Debt Recovery Tribunal says liquor baron cannot withdraw $75 mn received from Diageo till case is disposed of.

BENGALURU:  It was a double whammy for liquor baron Vijay Mallya on Monday. While the Enforcement Directorate (ED) slapped a money laundering case against him and IDBI Bank officials, the Debt Recovery Tribunal (DRT) in Bengaluru dealt him another blow by barring him from withdrawing $75 million (about `515 crore) due from a ‘sweetheart’ deal he had settled with British liquor major Diageo in February.

The move comes hours after a defiant Mallya claimed he was not an ‘absconder’ or ‘judgment defaulter’ and that he was working on a one-time settlement with banks, even as he was projected as a ‘poster boy’ of all bad loans. This is also one of the first high-profile non-performing asset cases where banks are moving aggressively to recover dues.

Sources said the ED was looking into the overall financial structure of the now defunct Kingfisher Airlines and a separate probe under foreign exchange violations could be initiated.

“Mallya and others will soon be questioned. The agency has collected relevant documents from authorities concerned and the banks in question,” a source said.

The ED has pressed charges under various sections of the Prevention of Money Laundering Act (PMLA) based on an FIR registered last year by the CBI, which had booked Mallya, director of Kingfisher Airlines, the company, A Raghunathan, CFO, and unknown officials of IDBI Bank in its FIR alleging that the loan was sanctioned in violation of norms regarding credit limits. The CBI action came as part of its wider probe into criminal aspects of loans declared to be non-performing assets by public sector banks.

Meanwhile, DRT judge 

C R Benakanahalli restrained Diageo, owner of United Spirits Ltd, from temporarily disbursing $75 million to Mallya till the disposal of Kingfisher Airlines’ loan default case filed by lead banker SBI in 2013. The judge sought details of the agreement. Three other applications filed by SBI before the DRT, including one seeking Mallya’s arrest and impounding of his passport, will be heard in March. 

mug of woes

• May 9, 2005: Maiden flight of KfA
• June 2007: Mallya buys Air Deccan. Months later, forays into Formula One
• 2009-2012: Following losses, KfA curtails its international operations; multiple

staff strikes hit KfA

• Feb 2013: KfA loses flying slots even as lender banks start recalling loans amounting to `7,500 cr
• Aug, Sept 2014: PNB issues notice to KfA, says it wilfully defaulted on dues of over `770 cr. UBI declares Mallya, 3 directors of KfA as wilful defaulters
• Oct 2015: CBI raids Mallya, defunct KfA in loan default of `900 crore
• Jan 2016: Ministry of Corporate Affairs sends notice to USL asking why action should not be taken against it, its former directors, including chairman Mallya