IDBI Of­fi­cials Re­laxed Loan Rules for KFA, Says CBI

The Economic Times - - Pure Politics - Raghav.Ohri@ times­group.com

New Delhi: IDBI Bank of­fi­cials al­legedly re­laxed sev­eral norms to sanc­tion loans to busi­ness ty­coon Vi­jay Mallya’s King­fisher Air­lines (KFA), ac­cord­ing to the Cen­tral Bureau of In­ves­ti­ga­tion. The CBI’s charge-sheet, which runs into over 15,000 pages, was filed in a Mum­bai court last week and con­tains al­le­ga­tions of a se­ries of ir­reg­u­lar­i­ties, in­clud­ing the de­layed sub­mis­sion of guar­an­tees and ref­er­ences made by KFA to meet­ings be­tween Mallya and then IDBI Bank chair­man Yo­gesh Ag­gar­wal, pur­port­edly to in­flu­ence the sanc­tion of loans.

The agency al­leged that the bank’s de­mands for the pledge of un­en­cum­bered shares were turned down. Mallya, in an email dated Novem­ber 12, 2009, in­structed A Raghu­nathan, then the CFO of the air­line, to in­form the bank of­fi­cials that non-pledg­ing of un­en­cum­bered shares was an “AC­CEPTED po­si­tion.”

Fol­low­ing are ex­cerpts from the CBI’s charge-sheet in the case:

GUAR­AN­TEES TO BE GIVEN WITHIN 15 DAYS FUR­NISHED AFTER OVER A YEAR

A cor­po­rate guar­an­tee of United Brew­eries Hold­ings and a per­sonal guar­an­tee from Mallya, stip­u­lated for a short-term loan of ₹ 150 crore sanc­tioned on Oc­to­ber 8, 2009, were re­quired to be fur­nished within 15 days from the date of dis­burse­ment. The guar­an­tees were sub­mit­ted to the bank in De­cem­ber 2010.

Fur­ther, a sug­ges­tion by the bank’s risk depart­ment to ver­ify Mallya’s net worth was not in­de­pen­dently val­i­dated. Mallya ex­e­cuted three sep­a­rate guar­an­tee agree­ments in favour of IDBI Bank be­tween Oc­to­ber 2009 and De­cem­ber 2009 but sub­mit­ted his state­ment of as­sets and li­a­bil­i­ties only with the first.

The charge-sheet con­tends that Mally- a’s state­ment does not con­tain de­tails of his as­sets, es­pe­cially VJM Re­sorts in South Africa, with an es­ti­mated value of $10 mil­lion (`49.75 crore), and his share in the Es­tates of Devi Mallya and Prema Mallya. Even the 100% stake in UNB-South Africa, valued at $150 mil­lion (`746.25 crore) was not in­de­pen­dently ver­i­fied.

REF­ER­ENCES OF MEET­INGS BE­TWEEN MALLYA AND YO­GESH AG­GAR­WAL

The CBI said KFA re­ferred to meet­ings be­tween Mallya and Ag­gar­wal, the then CMD of IDBI who is cur­rently in ju­di­cial cus­tody, to seek ur­gent re­lease of loans. Sam­ple this: After a meet­ing be­tween Mallya and Ag­gar­wal on Oc­to­ber 6, 2009, CFO Raghu­nathan shot off a let­ter to the bank giv­ing “ref­er­ence of meet­ing dated Oc­to­ber 5 and Oc­to­ber 6.” Raghu­nathan sought sanc­tion for a ₹ 150 crore loan for six months to KFA to meet “cer­tain crit­i­cal obli­ga­tions” to over­seas ven­dors and ser­vice providers. How­ever, no doc­u­ments were en­closed with the let­ter and the de­tails of over­seas ven­dors/lease rentals/ser­vice providers was not given.

Let­ters in pos­ses­sion of CBI re­veal that the grant of the short-term loan was “pre-de­cided” dur­ing the meet­ing be­tween Mallya and Ag­gar­wal.

Ac­cord­ing to the charge-sheet, the claim is sup­ported by the fact that the gen­eral man­ager of IDBI Bank pro­cessed the re­quest on Oc­to­ber 7, 2009, it­self and sub­mit­ted a “hastily drafted mem­o­ran­dum” to the credit com­mit­tee, rec­om­mend­ing sanc­tion of the ₹ 150 crore loans to KFA. The com­mit­tee ap­proved the re­quest the same day.

FALSE AS­SER­TIONS BY KFA BRASS, WAIVER SHOWN AS COM­PEN­SA­TION

The CBI said that risk con­cerns raised in the rat­ing re­port by bank of­fi­cials and com­pen­sa­tion said to be sought from M/s In­ter­na­tional Aero En­gines were based on a mail dated Novem­ber 12, 2009, re­ceived from accused Amit Nad­karni, a KFA of­fi­cial. In the let­ter, Nad­karni said that KFA’s ca­pac­ity and rev­enue were re­duced after the air­line suf­fered 20 en­gine fail­ures in the first half of fi­nan­cial year 2010. He said that dis­cus­sions were on with en­gine man­u­fac­tur­ers In­ter­na­tional Aero En­gines for com­pen­sa­tion, “which has not been re­flected in the busi­ness plans or the fi­nan­cials.”

The CBI said it probed the mat­ter and found that no com­pen­sa­tion was ever paid by In­ter­na­tional Aero En­gines to KFA. In­stead of seek­ing com­pen­sa­tion, KFA en­tered into five agree­ments with IAE for “waiver of claims; re­pay­ment of over­due, re­work ar­range­ments, etc.”

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