Fugitive liquor baron Vijay Mallya used Kingfisher Airlines to launder as much as Rs 9,990 crore, the Enforcement Directorate's (ED) latest chargesheet against the embattled tycoon has claimed. Mallya, who fled to London in 2016, is facing extradition charges. Mallya was the founder, CEO and Chairman of Kingfisher Airlines Ltd (KAL) before the airline became defunct in 2012.
In its prosecution complaint filed on Monday, the ED has named Vijay Mallya as the prime accused in the case, with Kingfisher Airlines Ltd (KAL) and United Breweries Holdings Ltd (UBHL) being parties to the crime. The agency has constituted charges against them under sections of the Prevention of Money Laundering Act (PMLA), 2002.
In the chargesheet, Mallya has been accused of generating the proceeds of crime (PoC), laundering same, and then concealing and using it. The money laundering law defines PoC as any property obtained directly or indirectly via a criminal activity.
"Vijay Mallya is the prime mover of the entire plot who, through his completely controlled mechanism of KAL entered into a criminal conspiracy, cheated the lender banks of the consortium of banks by dishonestly inducing them to sanction and disburse loans without offering any valuable collateral when KAL had very poor financial credibility. He, by way of over-invoicing, diversion and misrepresentation in diverting the outward remittances, laundered the same by way of concealment, layering and integration through a complex web of financial and other transactions," the ED chargesheet said.
"The Modus Operandi for siphoning off money abroad was by over-invoicing the lease rent and other payments. To siphon off the loan amount, Vijay Mallya over-invoiced import of services to the extent of around 60 per cent, for example, in the case of Veling Narain. Another method to siphon off money was to transfer funds to his foreign bank accounts such as HSBC Bank, London - giving false declaration about the purpose of remittances as operational expenses and thereafter, diverting these funds to his sister concern FIF1TL, owned by Watson Ltd," the chargesheet further said.
He routed the money through various bank accounts i.e. from State Bank of India to UCO Bank, then to Deutsche Bank and thereafter, to Mallya's IPL franchisee Royal Challengers Bangalore, the chargesheet added.
Kingfisher Airlines has been accused of acting as a vehicle to obtain the funds that were laundered. Mallya, in connivance with the other officials of Kingfisher Airlines, had cheated a consortium of banks to acquire funds to the tune of Rs 9,990.07 crore, and then laundered the same, the probe agency said.
The ED has accused United Breweries of assisting the act money laundering "as it had given corporate guarantees to the consortium of banks in case there is a default in repayment of loan amount by KAL".
"UBHL as part of conspiracy, deliberatly and intentionally did not honour the same and filed a suit before the Bombay High Court after a period of 3 years stating that the guarantee was obtained under duress," the chargesheet said.
It further stated that Mallya was an active participant in generation of PoC and the activity of money laundering as defined under Section 3 of PMLA, 2002, and is liable for punishment under Section 4 of PMLA, 2002. The section calls for rigorous imprisonment for a term not less than three years but which may extend to seven years, along with a financial penalty up to Rs five lakh.