“The preparation for sending a letter rogatory request to ministry of external affairs (MEA) for foreign judicial assistance is also at an advanced stage and will be despatched in a week,” said the ED official.
The ED had moved the court last Friday seeking NBW after Mallya failed to appear before the agency despite three summons sent to him.
Soon after this, his Kingfisher Airlines filed an application in the court on Monday, claiming the allegations made by the enforcement agency that Mallya had diverted Rs 430 crore of an IDBI Bank loan to acquire assets outside the country, was “false and incorrect”. The special court rejected Kingfisher Airlines’ plea. Kingfisher Airlines’ counsel Amit Desai argued the alleged Rs 430 crore was utilised in legitimate expenses and was noted in the balance sheet of the company.
He claimed former group chief financial officer R Nedungadi and Kingfisher Airlines CFO A Raghunathan appeared before the enforcement agency on behalf of the company and furnished audited accounts of Kingfisher Airlines for 2009-10.
Desai also told the court that the Kingfisher officials had also provided details of foreign remittances done by the airline during the year.
Responding to the arguments, the ED counsel Hiten Vengaonkar said, “You can’t monitor my application and its purpose, and for verification of the documents in person appearance is required.”
The ED, in the special court, also pointed out the secret details of the money lying in Mallya’s overseas accounts in the respective period when the loan was sanctioned.
Business Standard reviewed the copy of the warrant application filed before the court by the ED.
MALLYA ON ED RADAR
THE STORY SO FAR
ED to send request to Interpol via CBI for Mallya’s deportation
Also preparing letter rogatory to get Mallya’s foreign assets and bank account details, via MEA
Had issued three summons for a personal appearance to Mallya, which he skipped
Alleged Rs 423-crore IDBI Bank loan was siphoned off to create properties
Identified recipients/beneficiaries along with their bank accounts
Submitted list of Mallya’s domestic and foreign properties, bank account details to PMLA court
Oct 2015: CBI files criminal case against Mallya, Kingfisher Airlines,A Raghunathan and IDBI officials
Dec 2015: CBI questions Mallya
Mar 2016: Mallya leaves for London
Mar 7, 2016: ED registers an ECIR under PMLA against Mallya, KFA and others
Mar 18, Apr 2 and Apr 9: Mallya does not appear in person at ED
Apr 15: MEA suspends Mallya’s passport for four weeks
Apr 16: ED seeks non-bailable warrant against Mallya
Apr 18: PMLA court issues warrant
It said, out of the total loan of Rs 950 crore, sanctioned and disbursed by IDBI Bank, Rs 423 crore had been remitted out of India.
The agency submitted crucial details in a sealed envelope, which comprised a list of properties abroad which Mallya created from the proceeds, bank account details of 2009-10 and statements of Kingfisher Airlines and others admitting how Mallya diverted IDBI Bank loan for his own activities.
The application explained that the restructuring of the IDBI Bank loan was carried out in December 2010 and during the restructuring, an amount of Rs 1,303.2 crore was initially converted into convertible preferential shares of Rs 553.10 crore and non-convertible preferential shares of Rs 750.1 crore. These were later converted into equity shares of Kingfisher Airlines.
The warrant application given to investigative officer of this case quoted one of the Kingfisher official saying, “Whenever Mallya calls, he calls from his UK number.”
The warrant application also stated that the Kingfisher official had submitted various documents pertaining to the company and also details of Mallya’s properties located in India and abroad.
The application highlighted how Mallya evaded appearing in person despite three summons and had informed the ED that he was outside India to attend to certain prior commitments in Europe which were planned earlier and requested for permission to appear in the ED office in early April 2016. Mallya also said he was in active negotiations with various European entities for honouring his offer of one-time settlement with the consortium of banks, which had given loans to Kingfisher Airlines, and hence he was required to remain in Europe to achieve the crucial objective.
In its concluding remarks in the NBW application, ED said that Mallya had been actively involved in generation of proceeds of crime through the scheduled offence and subsequent layering and laundering of the same.
So far, scrutiny of the documents by ED officials in this case revealed that the loans sanctioned were not backed by quality collateral.
These apart, the brand value of Kingfisher was one of the collaterals, which was valued at Rs 3,406 crore, which appears unreasonable and is not in sync with the general trend.
“There is a possibility that these properties are acquired from the proceeds of crime involved in the present offence and also there is possibility that Mallya may alienate and/or dispose of the same, thereby creating hurdles in the investigation completely frustrating the proceedings under anti-money laundering acts,” according to the application.