Kingfisher: banks, officials under scanner after SFIO report

The role of bank executives, directors and government officials has come under the scanner for alleged violations at the now-defunct Kingfisher Airlines as multi-agency probes against fugitive liquor baron Vijay Mallya gather steam, reports PTI citing regulatory and banking sources said.

With the Serious Fraud Investigation Office (SFIO) submitting a detailed report on the misdoings at Kingfisher Airlines, which went belly-up in 2012, the government, regulators and banks are set to initiate stronger action actions to zero in on the guilty.

The SFIO has red-flagged a slew of violations of companies law by Mallya, Kingfisher Airlines and officials, including serious corporate governance lapses (See: Mallya gave free rides to politicos, bankers for favours: UK frauds office).

The role of independent directors and whether they failed in discharging their duties during their tenure at the airline has come to the fore, PTI's sources said.

Besides the role of bank executives in extending loans to the airline without due diligence as well as the possibility of some government officials conniving with Mallya are being looked into in detail.

Indian authorities have been working on ways to bring back Mallya, wanted for Kingfisher Airlines' default on loans worth nearly Rs9,000 crore as well as diversion of funds, back from the UK.

Sources said all banks where the SFIO has found lapses with respect to loans extended to the defunct airline are under the scanner.

"The company's balance sheet was never strong and its credit rating was lower than what was required for sanctioning loans. Still, the banks went ahead and sanctioned them, deviating from the loan procedures," one of the sources said.

The investigators have also found that banks considered only one valuer's report for the valuation of Kingfisher brand and based on that loans were given to the carrier, the report says.

Regulations require that at least two different valuation reports should be considered before deciding to give loans on the basis of a brand.

Corporate affairs ministry officials were not available for comments on the SFIO report when contacted by PTI while queries sent to Mallya did not elicit any immediate response.

The 61-year-Mallya was arrested in London last week in a money laundering case filed by India's Enforcement Directorate, before being released on bail by Westminster Magistrate's Court (See: Mallya arrested in London in money laundering case, let off on bail).

Mallya, already out on bail on an extradition warrant executed by the Metropolitan Police earlier this year, was released on the same bail conditions as before to appear for his trial on 4 December.