Mallya gave free rides to politicos, bankers for favours: UK frauds office
07 Oct 2017
The Serious Fraud Investigation Office (SFIO) has alleged in a report that former liquor baron Vijay Mallya dished out freebies to bribe politicians, government officials and bureaucrats to buy their silence and bring them onto his side.
According to a report in The Indian Express, the SFIO has alleged that ''outside pressure and intervention'' was used in the ''sanction and disbursement of corporate loan of Rs2,000 crore'' to the now-defunct Kingfisher Airlines Ltd.
The SFIO has said that emails it accessed – from computers seized by the Central Bureau of Investigation - show that the finance ministry officials advised banks like State Bank of India, Bank of Baroda and Bank of India to sanction loans to Kingfisher Airlines. The emails, the SFIO says, contain proof of corporate espionage, freebies to politicians, officials and bureaucrats to buy influence, and co-opting of independent directors using incentives and contracts.
Kingfisher owes over Rs9,000 crore to at least 17 lenders including SBI, IDBI Bank, Punjab National Bank, Bank of India, Bank of Baroda and United Bank of India.
Mallya, 61, wanted by Indian courts in a case of wilful default on bank loans, is currently in the UK, where he has been arrested and granted bail twice. He was last arrested on 3 October and let of on £650,000 bail.
The SFIO sent a 127-page summary of its finding to India's ministry of corporate affairs on 27 August, the newspaper reported. It said that Mallya met with a former SBI senior official in 2009 as per the advice of a senior finance ministry official, who assured disbursement of a loan of Rs500 crore from the bank.
The report says that an analysis of emails revealed cases of ''corporate espionage,'' freebies to politicians, officials and bureaucrats to buy influence and co-opting of independent directors using incentives and contracts.
Mallya ''obtained information or data on number of passengers, market share etc, from officials of DGCA (Directorate General of Civil Aviation) even before the data were placed before the top official of DGCA'' and using this data he was ''was able to undercut the prices/fare and tried to capture and dent the market share of competitors'', The Indian Express quotes the SFIO report as saying.
In addition, Mallya gave out concessions on business class and first class tickets on Kingfisher Airlines to ''politically influential persons'' and also paid for chartered helicopters that were used during elections. He also gave Ministry of Finance officials free airline tickets for international flights, and gave others tickets at a 50 per cent discount. The costs were borne by Kingfisher Airlines, the SFIO has said.
According to the SFIO, Mallya used these measures to ''to get necessary approvals on priority required for running the airlines, but in the long-run this adversely affect(ed) the viability of operations''.
Independent directors on the company board also did not question the accounts, the SFIO has said. ''Independent directors, who were also part of the audit committee of the board, did not question the rationale behind the various accounting policy and methodology changes made by Kingfisher in its financials from the year 2008-09 onwards,'' The Indian Express quotes the report as saying. ''They were unaware of the effects of these accounting policy changes on the profitability and financials of the company.''
Some of these independent directors, the report continues, have a conflict of interest as they also had business or commercial relationships with the airline and also the UB Group.