Kingfisher ‘camouflaged’ loans to Vijay Mallya’s F1 team: CBI

Kingfisher ‘camouflaged’ loans to Vijay Mallya’s F1 team: CBI

In the guise of running its offices, between 2008 and 2012, the airline company allegedly transferred $500 million to its own accounts in HSBC Bank, UK.

Bhavna UchilUpdated: Wednesday, March 22, 2023, 11:55 PM IST
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Kingfisher ‘camouflaged’ loans to Vijay Mallya’s F1 team: CBI |

The now defunct Kingfisher Airlines Ltd (KAL) camouflaged bank loans to its chairman and CEO Vijay Mallya’s Formula 1 team as ‘office and operational expenses’ to run its UK offices.

The CBI has said this in a supplementary charge sheet filed last June. The document was made available to the accused only recently. The airline also hid that the racing team was a related entity in its audits filed in India. In the guise of running its offices, between 2008 and 2012, the airline company allegedly transferred $500 million to its own accounts in HSBC Bank, UK.

Kingfisher spent $60 million on a private jet for Mallya

The agency checked the statements of the UK account and those of Axis and IndusInd banks in India and found that funds remitted from these accounts on such pretext were diverted to Force 1 Formula 1 Team Ltd (F1F1) during the time. The agency said that the airline’s UK account with HSBC Bank had no other funds at the time for transfer to the racing team and the only amounts were those from Indian banks.

The probe also showed that when the airline was depending on bank loans to sustain its operations, it spent $60 million on a private jet for Mallya. After acquiring it, the company took out Rs100 crore from its diminishing cash flows to repay the loan. Some of the loan installments were paid from loans taken from IDBI and SBI banks.

The investigation found that Mallya had received $40 million from Diageo PLC, USA, an alcoholic beverage company, for a 2016 agreement so that his brands did not compete with it in Asian markets. As per the agreement, Mallya was to receive $75 million and was bound not to alienate it as per a personal guarantee agreement with IDBI and SBI for loans availed by the airline. Through a response to court requests sent to Switzerland authorities for information in a Swiss account, the charge sheet states thatthe probe found that in violation of the agreement, he received the amount in a Swiss bank account and alienated it by transferring it to three trusts in the name of his children, Siddharth, Leanna and Tanya Mallya.

Mallya had sufficient funds at his disposal but didnt support airlines

The charge sheet also states that while the airline was facing severe financial crunch in India and Mallya was making promises to lenders of equity infusion into it, he was acquiring personal assets overseas. He bought a property, ‘Le Grande Jardin’, worth Rs250 crore in France and a UK property worth Rs80 crore. He was living in the UK property at the time of filing of the charge sheet.

The document further stated that in the account of a company incorporated in the British Virgin Islands linked with Mallya, there was significant financial activity from 2008 to 2014 with F1F1, among other entities. The agency alleged that the transactions show that Mallya had sufficient funds at his disposal at the time, but he did not use the funds to support the airline or honour his obligations as a personal guarantor to lenders for facilities availed by the airline.

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