ED files money laundering case against Vijay Mallya

NEW TROUBLE IDBI Bank allegedly failed to mortgage collateral against loan to KFA

MUMBAI: The Enforcement Directorate (ED) registered a case of money laundering against liquor baron Vijay Mallya on Monday, citing a case registered by the Central Bureau of Investigation (CBI) last year.

ED officials in Mumbai said the case was registered in the backdrop of a loan of ` 900 crore being disbursed by IDBI Bank allegedly going bad.

The case names United Breweries (Holdings) Ltd (UBHL) chairman Mallya, then chief financial officer (CFO) of the nowdefunct Kingfisher Airlines (KFA) along with IDBI Bank officials, who processed the loan. The bank failed to mortgage collateral in lieu of the money given out.

Officials suspect senior bank executives received kickbacks worth crores for clearing the loan proposal and disbursing the money.

The ED will now probe roles of individuals who processed the loans and reasons for not following procedures.

In a startling revelation during the probe, ED officials learnt that ` 300 crore was diverted to the UK, whereas, the remaining ` 600 crore was tracked down to various parts of the country.

“The money, however, has not been used for the purpose it was borrowed from the bank. We are now probing where all the money was diverted if it was not pumped into the ailing airline business,” a senior ED official said.

The bank disbursed a hefty amount to the company despite it not being eligible due to the financial turmoil it was battling and KFA’s negative credit ratings, a CBI source said.

The ED registered a case under the sections of the Prevention of Money Laundering Act (PMLA) against Mallya, then CFO, and IDBI Bank employees. Summons will be sent soon to Mallya for making himself available for questioning, officials added.

Following the case by the CBI in October 2015, the investigative agency searched Mallya’s home and offices in connection with an alleged default of the IDBI loan.

CBI officials said the agency found “several probe-related documents” during the searches in Mumbai, Bangalore and Goa. The FIR by the CBI was registered under sections pertaining to criminal conspiracy, criminal breach of trust by a public servant or a banker, merchant or agent, and criminal misconduct by a public servant.

The CBI had earlier registered a preliminary enquiry in the case to examine the alleged bad loan.