VJ Mallya to face new charges

New charges are soon to be laid in India against VJ Mallya, the former head of United Spirits (USL), who fled to the UK in March 2016.

(Photo: Wiki)

The country’s Central Bureau of Investigation and Enforcement Directorate together allege that most of the more than £600m that Mallya borrowed from a consortium of bank lenders was diverted to shell companies in half a dozen countries.

The new money-laundering case covers monies advanced to Mallya’s Kingfisher Airlines by a consortium of Banks led lead by the State Bank of India between 2005 and 2010. In all, it is alleged that Mallya’s debts now stand at more than £1bn including interest.

A first charge of loan fraud filed by both agencies earlier this year related to a much smaller sum. But India’s authorities hope the new charges will expedite Mallya’s extradition from the UK. The formal hearing will begin Westminster Magistrates Court in early December.

“As matters are sub-judice, I cannot comment in detail but I reject all these wild, baseless and deliberately fabricated allegations,” Mallya is reported as saying. He has consistently denied any wrongdoing and claims he wants to reach a settlement with the creditor banks.

In a separate development, it is believed that Britain’s Serious Fraud Office is also investigating Mallya for alleged money laundering in the UK and beyond through a circuitous route and a complex web of companies.  Although the SFO has declined to comment, such a probe is probable because under the terms of the treaty with India to be successful an extradition request requires evidence that the actions alleged would also break British law.

“We are in the process of filing a second prosecution complaint,” an anti-fraud official In India is quoted as saying. “Our investigation has revealed that loans disbursed by banks to Kingfisher Airlines was diverted by Mallya and his associates to shell companies.We have sent letters rogatory and are expecting replies from the US, UK, France and Ireland soon.”

Mallya has already been declared a proclaimed offender in India and found in contempt of the country’s supreme court.

United Spirits, now controlled by Diageo, has also filed multiple complaints against Mallya after inquiries revealed “improper transactions”. USL claims Mallya diverted funds to nearly half a dozen companies in which he had a direct or indirect interest, mostly located in tax havens.