The Central Bureau of Investigation (CBI) on Saturday conducted searches and seized several incriminating documents from the offices and residences of UB Group chairman Vijay Mallya in connection with an approximately Rs 900-crore loan by IDBI Bank to Mallya’s now-defunct Kingfisher Airlines. The day-long searches were conducted at five places in Bengaluru, Goa and Mumbai.
The CBI has also registered a case against Vijay Mallya, CFO of the airlines A Raghunathan, and other unknown officials of IDBI Bank for allegedly violating banking norms in sanction and disbursement of credit limits of about Rs 900 crore, the CBI said.
A case of criminal conspiracy under Section 120-B of the IPC, along with criminal breach of trust provisions of the Prevention of Corruption Act, was filed in the matter. “It is alleged that officials of IDBI Bank colluded with the promoters/directors and CFO of the airlines and sanctioned credit limits of approximately R900 crore in violation of banking norms, thereby causing loss to the bank,” the CBI statement said. Of the five places searched, three were in Mumbai and one each in Bengaluru and Goa.
A UB Group statement said: “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 cooperation.”
The CBI’s action is said to be part of its probe against banking NPA frauds, which it had started a year ago. In August 2014, the investigating agency had registered a preliminary enquiry (PE) against Kingfisher Airlines and IDBI Bank in connection with the lending of R900 crore by the bank to the sick airlines despite the airline’s negative net worth and negative credit rating at the time of sanctioning the loan.
The investigating agency had registered the PE after it found IDBI’s report unsatisfactory. The Bank had allegedly lent Rs 900 crore to the sick airline despite an unfavourable internal report by the bank. The agency had questioned the public sector bank on why it provided Kingfisher with the loan when the company was in the red.
The CBI officials are also likely to interrogate Mallya in the case. The investigation is still on in the matter, CBI said.
Vijay Mallya’s Kingfisher Airlines took off well in 2005. However, it suffered huge losses following its acquisition of budget carrier Air Deccan in a Rs 550-crore deal in 2007. Mallya owes money to banks, employees, caterers, aircraft leasing companies, fuel supplier HPCL and even taxi operators. Kingfisher Airlines suspended operations in October 2012.
In December 2011, SBI said KFA loans had turned bad. The bank had Rs 1,500 crore due from the airline. In May 2014, one of the lenders, United Bank of India, slapped a willful defaulter notice on Mallya.