October 7, 2017
Kingfisher owes over Rs 9000 crore to at least 17 lenders including SBI, IDBI Bank, Punjab National Bank, Bank of India, Bank of Baroda and United Bank of India.
October 7, 2017
Kingfisher owes over Rs 9000 crore to at least 17 lenders including SBI, IDBI Bank, Punjab National Bank, Bank of India, Bank of Baroda and United Bank of India.
Liquor baron Vijay Mallya met with a former SBI senior official in 2009 as per the advice of a senior Finance Ministry official. (Source: File Photo)
An investigation by the Serious Fraud Investigation Office (SFIO) has alleged that “outside pressure and intervention” was used in the “sanction and disbursement of corporate loan of Rs 2,000 crore” to the now-defunct Kingfisher Airlines Ltd.
According to the SFIO report, it accessed emails — seized from computers obtained by CBI — which show that Ministry of Finance officials advised banks like State Bank of India, Bank of Baroda and Bank of India to sanction loans to Kingfisher Airlines. In fact, the 157-page summary of the SFIO report, submitted to the Ministry of Corporate Affairs on August 27, said that liquor baron Vijay Mallya met with a former SBI senior official in 2009 as per the advice of a senior Finance Ministry official, who assured disbursement of a loan of Rs 500 crore from the lender.
The report says that an analysis of emails revealed cases of “corporate espionage,” freebies to politicians, officials and bureaucrats to buy influence and co-opting of independent directors using incentives and contracts.
The key findings alleged in the report:
* Mallya “obtained information or data on number of passengers, market share etc., from officials of DGCA (Directorate General of Civil Aviation) even before the data were placed before the top official of DGCA (Director General of DGCA)” and using this data he was “was able to under cut the prices/fare and tried to capture and dent the market share of competitors”
* Mallya granted favours to “politically influential persons for travel in Kingfisher Airlines (by offering business or first-class seats always against the payment of economy class fare) and paid the expenses relating to hiring of chartered helicopters used during elections”.
* He entertained officials from the MOF (Finance Ministry) for travel outside the country “by issuance of first-class/ business-class tickets free of cost.” On several occasions, he agreed to the request of officials closely related to the the operations of Kingfisher to discount ticket prices by 50%. These losses on account of free/discounted tickets were borne by Kingfisher.
These gestures and favours helped Mallya and his UB Group “to get necessary approvals on priority required for running the airlines, but in the long-run adversely affect(ed) the viability of operations,” said the SFIO report.
n Some independent directors of Kingfisher Airlines did not fulfil their duties. Some of them were flown to Paris with their spouses for a board meeting. At that meeting, they did not raise any questions related to the health of the group.
*“Independent directors, who were also part of the audit committee of the board, did not question the rationale behind the various accounting policy and methodology changes made by Kingfisher in its financials from the year 2008-09 onwards,” the report said. “They were unaware of the effects of these accounting policy changes on the profitability and financials of the company.”
The report further states that “many of the independent directors did not question the company and KMPs (key management persons) on the economic viability of the operations and ability to meet its commitment towards creditors and debts in the meetings”.
It has further alleged that some independent directors of Kingfisher had a conflict of interest since they also had business or commercial relationships with the airline and also the UB Group. Kingfisher owes over Rs 9,000 crore to at least 17 lenders including SBI, IDBI Bank, Punjab National Bank, Bank of India, Bank of Baroda and United Bank of India.
Courtesy/Source: Indian Express
