Liquor baron Vijay Mallya will be the first person to be persecuted under the recently implemented Fugitive Economic Offenders Ordinance. It is an important development as the Ordinance gives more teeth to authorities to confiscate properties of economic offenders, such as Nirav Modi and Lalit Modi, who left the country to avoid facing criminal prosecution.
The application was filed against Mallya before a special court under Prevention of Money Laundering Act (PMLA) by the Enforcement Directorate (ED). The special court will now start its proceedings to declare him as the fugitive economic offender.
This the second charge sheet against Mallya by ED which submitted its application in a special court against Vijay Mallya and his two firms – United Breweries Holdings Limited and the now-defunct Kingfisher Airlines Limited for fraudulently diverting over Rs 3,700 crore bank loan frauds to a UK-based F1 motorsport firm, a T20 IPL team, and for enjoying private jet sorties.
The Fugitive Economic Offenders Ordinance, 2018 was promulgated on April 21, 2018 by the President Ramnath Kovind. A fugitive economic offender includes a person against whom an arrest warrant has been issued for committing an offence and the value of the offence is at least Rs 100 crore. It can charge sheet a person who has left the country to avoid facing prosecution, or refuses to return to face prosecution. Some of the offences for which the person can be charged under the Act, includes counterfeiting government stamps or currency, cheque dishonour, money laundering, and transactions defrauding creditors.
Kingfisher Airlines took a loan of Rs 6,027 crore from the consortium of 17 banks led by State Bank of India. After taking an interest income into account the sum has grown to a whopping sum of Rs 9,990 crore as on May 15. The loan was given on personal guarantee of Mallya, the corporate guarantee of UB Holdings and inflated brand guarantee of Kingfisher Airlines.
“The SBI, which is the consortium leader, has calculated the amount (of the loan) to the tune of Rs 9,990.07 crore (including applied interest) as on May 15, 2018,” the agency said in the charge sheet.
The ED alleged that Mallya and KAL officials “hatched a criminal conspiracy for obtaining/sanctioning of bank loan to Ms KAL in gross violations of established procedures and the firm had no intention for repayment of the loan. Mallya and KAL projected the brand value of the airline as a collateral security inspite of the same being a hypothetical assets and suffering from deficiencies.”