Kingfisher Airlines chief Vijay Mallya had no intention of honouring a personal guarantee he had given to IDBI Bank, even before his now defunct private carrier allegedly got involved in a loan default worth Rs 900 crore, according to a supplementary chargesheet filed in the case by CBI, the Indian Express reported on Friday.
The newspaper said that in the chargesheet filed last week in a Mumbai court against Mallya and officials of Kingfisher Airlines and IDBI Bank, the CBI sought to support its charge with a copy of an email allegedly sent by Mallya on January 6, 2012, to P A Murli, a senior official of United Spirits Limited (USL).
"I have been receiving mails from IDBI regarding the KFA account becoming a Non-Performing Asset or NPA. They may do suddenly something. Take the (Rs) 10 crore out of my account into USL tomorrow itself," stated the purported email from Mallya in the possession of Indian Express, which the CBI has referred to in the supplementary chargesheet.
The newspaper said in its report that in an earlier chargesheet filed in January, CBI had claimed that IDBI officials failed to obtain any legal opinion on keeping the Kingfisher Airlines brand, an "intangible asset", as collateral for the loan.
Indian Express said that CBI alleged in its supplementary chargesheet that it was Mallya who came up with the idea of using the brand value of Kingfisher Airlines as security for the loan. The CBI claimed that the idea was conceived by Mallya and suggested to then CFO of UB Group, Ravi Nedungadi, in an email dated September 10, 2008, the Indian Express report said.
In 2009, Mallya wrote to State Bank of India offering the brand value of Kingfisher Airlines — pegged at Rs 3,365 crore — as security for the loan, according to CBI. "The lending banks, including IDBI, were induced to believe that such a value is an outcome of the diligent exercise of an independent outside expert after rigorous investigation and valuation."
Deception and obfuscation
The CBI investigation, according to the report, revealed that such a favourable report was obtained by deliberately exaggerated financial indicators, which are different from the ones supplied to the banks," states the supplementary chargesheet, as quoted in the Indian Express report.
The agency alleged that Mallya told IDBI Bank while seeking the loan that Kingfisher would submit brand valuation reports carried out by two independent experts but eventually submitted only one, which was favourable to his company. The CBI had earlier claimed that the report by Grant Thornton clearly stated that it was done by the firm for "internal purpose" and was "not an investment advise".
"Investigation has further revealed that accused Vijay Mallya was also well aware of the findings of the report of Brand Finance showing a lower value of Rs 1,911 crore and a Powerpoint presentation of the said report was made before him alone by the Brand Finance team at his residence at Niladri, Mumbai on December 20, 2008, wherein he expressed dissatisfaction and told them that the numbers provided... were very conservative," the chargesheet claims. The CBI has alleged that this report, "based on more realistic projections", was "deliberately concealed".
The chargesheet also claimed that Mallya did not seek prior approval of lender banks, while entering into a settlement agreement on February 25, 2016 with USL as well as a Deed of Disengagement with Diageo PLC and receiving $40 million, the Indian Express report said. The CBI has claimed that Mallya, in correspondence with the SBI chairman on February 14, 2013, had said that UB Group will make a significant payment to the Kingfisher Airlines Bank Consortium out of the proceeds received from Diageo on the USL deal.
However, the agency has claimed that he "deceitfully concealed" this deed from the banks, revealing it after contempt proceedings were launched against him by the Supreme Court in 2016. The CBI has said that Mallya admitted in an affidavit filed before Supreme Court that the $40 million were "equally distributed to three separate trusts for the benefit of his three children" on February 26 and February 29, 2016. The Supreme Court has found him guilty of contempt and directed him to appear before it on July 10.
