Tracking down the money trail, the ED found that of the Rs 900-crore loan, Rs 423 crore was remitted outside India on account of aircraft lease rent, was in fact, for purchase of a property abroad

The Special Prevention of the Money Laundering Act (PMLA) court on Saturday reserved its order till Monday on the Enforcement Directorate's (ED) plea for a non-bailable warrant against Kingfisher Airlines boss Vijay Mallya.



Vijay Mallya

Special ED prosecutor Hiten Venegavkar told the court that Mallya has offered to cooperate with the investigation through video-conferences. He said the Mumbai unit of the CBI had registered a case on July 29 last year of a conspiracy and criminal breach of trust relating to a loan of Rs 900 crore sanctioned by IDBI Bank, Mumbai, to Kingfisher Airlines. Subsequently, the ED filed an offence, adding several sections under PMLA and took the case up for a probe.

The money trail

Tracking down the money trail, the ED found that of the R900-crore loan, Rs 423 crore was remitted outside India on account of aircraft lease rent, import of spare parts and aircraft maintenance service, but it was, in fact, for purchase of a property abroad.

A majority of the recipients/beneficiaries has been identified, along with their bank details. A financial intelligence unit reference has been prepared and sent to Ireland, the UK, the USA and France to verify the veracity of the transactions effected by the airlines in respect of payments made outside India, said Venegavkar.

A scrutiny of documents also revealed that the sanctioned loan was not backed by quality collateral. The brand value of Kingfisher was one of the collaterals -- valued at Rs 3,406 cr. This, said Venegavkar, appeared unreasonable and not in sync with the general trend of banks.

The loan was re-structured in December 2010, during which Rs 1,303.20 cr was initially converted into convertible preferential shares of Rs 553.10 cr and later, non-convertible preferential shares of Rs 750.10 cr on January 03, 2011, said Venegavkar. Thereafter, the same was converted into equity shares of the airlines worth Rs 11,63,30,639 at Rs 64.40 per shares on March 31, 2011. Payments of various amounts to companies apparently unrelated to the business were made, the prosecutor told the court.

Venegavkar also apprised the court of Mallya missing all three summons of the ED — on March 10, March 15 and April 2, seeking more time. "With these adjournments that Mallya is seeking, he might dispose of some of the properties outside India. Hence Mallya's custodial interrogation is utmost necessary to ascertain the trial of

the proceeds of crime," said Venegavkar.

Rs 900cr

The loan amount sanctioned to Kingfisher Airlines by IDBI bank