CBI arrests ex-IDBI Bank boss for Rs 900cr loan to Vijay Mallya’s Kingfisher Airlines

Mangalore Today News Network

Mumbai, January 24, 2017: In connection with Vijay Mallya’s Rs 900 crore Kingfisher Airlines (KFA) loan case, the Central Bureau of Investigation (CBI) has arrested nine individuals on charges pertaining to criminal breach of trust, criminal conspiracy and criminal misconduct.

 

Former bank officials and executives of KFA and IDBI Bank who have been arrested and would be presented before the CBI court in Mumbai are: Yogesh Aggarwal (former chairman of IDBI Bank), BK Batra, OV Bundellu, SKV Srinivasan and RS Sridhar (all IDBI Bank officials). From Kingfisher Airlines - A Raghunathan (former chief finance officer), Shailesh Borkar, AC Shah and Amit Nadkar. BK Batra was the ninth person to be arrested.
   
The CBI team on Monday conducted searches at 11 places including Mallya’s residence, 3 floors of UB Towers in Bengaluru, residence of Yogesh Aggarwal and Raghunathan among others. "A CBI team visited UB Group offices in Bengaluru and we are fully cooperating with them," UB group spokesperson said in a statement.
   
In July 2015, the First Information Report (FIR) filed by the CBI against former liquor baron revealed that some officers of IDBI Bank had showed undue favour to Kingfisher Airlines in sanctioning Rs 900 crore loan. Vijay Mallya and unknown IDBI Mumbai officers were named in the FIR.
   
In its preliminary investigation report, CBI had exposed how bank officials and KFA colluded and Mallya misused the loan amount and diverted the money abroad on false claims. Loans were sanctioned and disbursed by IDBI Bank to Kingfisher Airlines at various times in 2009.
   
It all started with a proposal for the sanction of a corporate loan of Rs 950 crore which was submitted by A Raghunathan, CFO, Kingfisher Airlines, and was marked for the attention of BK Batra (IDBI Bank official). Raghunathan referred to a meeting between Mallya and Aggarwal in a letter dated October 6, 2009, and requested the bank to lend the airline Rs 150 crore for six months to pay overseas vendors.
   
To begin the process, a memorandum was put up to the credit committee and the loan was sanctioned despite the company having a negative net worth and not satisfying the corporate loan policy of the bank. The credit committee comprising Batra, Bundellu and Bansal sanctioned the loan on October 7, 2009.
   
Not only that, Raghunathan, again referring to Mallya’s meeting with Agarwal, also sought an ad hoc release of Rs 200 crore. The proposal was put up to the corporate banking head, Batra, who recommended that the bank’s CMD could approve it. A few days later, on November 4, 2009 - IDBI Bank sanctioned a short-term loan of Rs 200 crore, subsumed in the total loan. The sanction came from Yogesh Aggarwal.
   
As per the CBI report, these loans were disbursed while the original proposal for a corporate loan of Rs 950 crore was pending. The proposal was put up again before the credit committee on November 19, 2009. On November 27, IDBI Bank released a corporate loan of Rs 750 crore, which was sanctioned by Bundellu, Batra and Srinivasan.
   
Pointing to Aggarwal’s role, the CBI said, "He approved the proposal while instructing for expediting the ratings though the auditors of the company had observed that funds aggregating to Rs 4,630 crore raised on short-term basis were used for long-term purposes. Undisputed TDS amount of Rs 100 crore plus was not deposited for over six months and the ratings were not available."
   
The CBI observed that the loans were approved by accepting as security the hypothecation and assignment of the Kingfisher brand, aircraft finance lease, a corporate guarantee from United Breweries Holdings and a personal guarantee from Mallya.
   
The CBI report said Rs 263.48 crore of the loan disbursed by IDBI Bank was transferred to KFA’s accounts in Axis Bank, ICICI Bank and Bank of Baroda from where funds were transferred to other KFA accounts. "This Rs 263 crore was never used for the purpose it was sanctioned by IDBI Bank, to meet obligations to overseas vendors".
   
The report concluded saying, "A major chunk of the funds transferred to Axis Bank were used for foreign remittances towards lease rentals, purchase of aircraft parts, etc. Since these remittances have gone outside the country, further inquiry can only be made by sending Letter Rogatory (LR) for foreign investigation."
   
The CBI team has taken all these accused to Mumbai office to present before the CBI court, seeking 14-day remand. Meanwhile, the Enforcement Directorate (ED) is also investigating the case, in fact, statements of few officials have been recorded, till now.