Mallya hid his networth using shell companies: ED
The ED has also alleged that IDBI Bank officials did not carry out any independent verification of the net worth statement submitted by Mallya with the personal guarantee for the loan. The ED has also alleged that IDBI Bank officials did not carry out any independent verification of the net worth statement submitted by Mallya with the personal guarantee for the loan.
The Enforcement Directorate (ED) has alleged that Vijay Mallya, chairman of the now defunct Kingfisher Airlines did not disclose to IDBI Bank, a sizeable chunk of assets held through “his dummy/indirectly controlled companies” at the time of giving personal guarantee for the Rs 900-crore loan. This, the ED complaint said was done “to avoid any threat” to the undisclosed “unencumbered” properties of Mallya. The total value of the undisclosed assets of Mallya, according to the probe agency is worth Rs 1,760 crore.
“No efforts were made to utilise them (unencumbered assets) to pay off the loans. Further, he (Mallya) has intentionally put his foreign properties in the personal guarantee instead of the above mentioned properties available in India, knowing well the difficulties involved in enforcing recovery against the same,” said the ED complaint.
The ED has also alleged that IDBI Bank officials did not carry out any independent verification of the net worth statement submitted by Mallya with the personal guarantee for the loan.
According to the ED prosecution complaint, Mallya had “furnished only one asset liability statement” of Rs 1,394 crore to the bank without giving “any specific details of his assets”.
The ED has named 11 companies that held Mallya’s unencumbered assets. Undisclosed assets include shares worth Rs 207 crore of United Breweries Ltd (UBL) held by The Gem Investment and Trading, shares of United Spirits Ltd (USL) and UBL worth Rs 89.68 crore held by Devi Investment Pvt and shares of McDowell, USL and UBL worth Rs 470 crore held by Mallya Pvt Ltd, among others.
“These companies were not having any actual activities and independent source of income. Vijay Mallya was controlling all the group companies through his office personnel … The directors in the shell companies were namesake or dummy directors … There are movable/immovable assets in these companies in the form of shares of public listed companies and landed properties. Therefore, it is apparent that the whole exercise of forming plethora of shell companies has been undertaken with the sole purpose of creating a web and camouflaging the link of these properties with Vijay Mallya, so as to alienate the properties to escape the liabilities,” the ED said.
ED added that in 2013, after KFA defaulted on the loan, Mallya and United Breweries (Holdings) Ltd, a corporate guarantor of the IDBI loan moved the Bombay High Court seeking “relief of declaration” that the personal guarantee of Mallya and the corporate guarantee of UBHL were “executed under duress, coercion and therefore, should be declared as invalid and unenforceable.” This according to the ED complaint was done to “stall” the loan recovery and “escape the burden of repayment of loan”.
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