Double whammy for Mallya: Money laundering case, stop payment order

Mumbai/New Delhi/Bengaluru: In a double blow to beleaguered business tycoon Vijay Mallya on Monday, the Enforcement Directorate in Mumbai lodged a money laundering case and the Debt Recovery Tribunal in Bengaluru barred British alcoholic beverages giant Diageo from paying him $75 million till a case against him was disposed off.

The tribunal barred Diageo plc from paying Rs.5.04 billion ($75 million) as a severance package to Mallya who quit the chairmanship of its Indian company, United Spirits Ltd. last month, till the pending case against the liquor baron before it is decided.

“The presiding officer of DRT (R. Benkanahalli) ordered temporary attachment of the severance package amount and directed Diageo not to pay it till our case is finally heard and disposed of,” counsel for State Bank of India told media persons in Bengaluru.

Reading out the one-page order, Benkanahalli said Mallya shall not temporarily draw the $75 million mentioned in the interlocutory application till the case’s disposal.

“Diageo plc and United Spirits Ltd shall not disburse the amount ($75 million) to Mallya or his nominees or agents till the disposal of the bank’s original application. Amount as sought by the applicant banks stands attached,” the order said.

The tribunal also directed all defendants to furnish details of the agreement on or before next date of hearing (March 28), when it will hear the bank’s three other applications, seeking his arrest, impounding of his passport and seizure of his assets.

It also ordered issuing notice of the bank’s application to Diageo office in London through registered post.

In another major stumbling block for Mallya, the ED on Monday registered a money-laundering case against founder of now defunct Kingfisher Airlines, officials said.

“We have filed a case against Mallya on Monday. The case is specifically based on the case registered by the CBI against him and others in 2015,” Assistant Director (Enforcement Directorate) A.K. Rawal told IANS in New Delhi.

Mallya and the top executives of the erstwhile KFA have been booked under Sections 3 and 4 of the Prevention of Money Laundering Act (PMLA), Rawal said.

The measure follows an audit of the Rs.7,200 crore loan that a consortium of 11 public sector banks led by the SBI had extended to the airline which it failed to repay.

The KFA is alleged to have diverted as much as Rs.4,000 crore of that money to international tax havens like Mauritius and Cayman Islands, which is being probed by the ED and the Central Bureau of Investigation (CBI).

Other businesses of Mallya were also being scrutinized by the ED under the PMLA, an official, requesting anonymity, told IANS in Mumbai.

Last week, CBI Director Anil Sinha had expressed dismay in Mumbai over the laxity of the lending banks and regulatory agencies in taking action against Mallya, other KFA directors and officials concerned.

It is feared that Mallya might become a fugitive from law by shifting base to a country where it might be difficult to make him face the Indian laws, officials said.

The flamboyant businessman, who recently announced his plans to spend more time with his family in Britain, as refuted all charges against him and taken exception to being labelled as a “wilful defaulter” by some of the lender banks.

Mallya has also denied he was planning to flee the country and said he was ready to cooperate with the lenders and the agencies to settle the debt.

Perceived as the ‘King of Good Times’, last month Mallya quit as USL chairman, the liquor company founded by his family, and sold its majority stakeholding to Diageo in return for a $75 million settlement package.

Mallya had shot into news last week when some former KFA employees wrote an open letter, blaming him for the grounding of the airline and damaging the country’s reputation in the aviation industry.

“We are still not able to understand what you meant when you said I don’t have money to pay your salaries while the spree continues, let it be Caribbean Premier League or luxurious yacht,” said the letter.

Once reputed as the most glamorous and luxurious private airline in the country, KFA feel into bad days and was grounded in October 2012 after a huge financial mess including default of bank loans, dues to oil companies, airports and even staff salaries.