Emails accessed allegedly contain information on corporate espionage, freebies to politicians, officials and bureaucrats to buy influence, and co-opting of independent directors.
Vijay Mallya. Credit: Reuters
New Delhi: The Serious Fraud Investigation Office (SFIO) has alleged in a report that liquor baron Vijay Mallya used freebies to bribe politicians, government officials and bureaucrats to buy their silence and bring them onto his side.
According to a report in the Indian Express, the SFIO has said that emails accessed show that the finance ministry officials advised banks like State Bank of India, Bank of Baroda and Bank of India to sanction loans to the now-defunct Kingfisher Airlines Ltd. The emails, the SFIO says, contain proof of corporate espionage, freebies to politicians, officials and bureaucrats to buy influence, and co-opting of independent directors using incentives and contracts.
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. Mallya is in the UK at the moment, and has been arrested and let off on bail there twice in a case of wilful default of bank loans in India. He was most recently arrested on October 3 and let of on £650,000 bail.
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The SFIO sent a 127-page summary of its finding to the Ministry of Corporate Affairs on August 27, the newspaper reported.
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”, Indian Express quotes the SFIO report as saying. In addition, he 61-year-old liquor baron gave out concessions on business class and first class tickets to on Kingfisher Airlines to “politically influential persons” and also paid for chartered helicopters that were used during elections. He also gave Ministry of Finance officials free airline tickets for international flights, and gave others tickets at a 50% discount. The losses from these transactions were borne by Kingfisher Airlines, the SFIO has said.
Also read: Mallya’s Good Times May Eventually Cost India’s Banks Rs 4,300 Crore
According to the fraud office, Mallya used these measures to “to get necessary approvals on priority required for running the airlines, but in the long-run adversely affect(ed) the viability of operations”.
Independent directors on the company board also did not question the accounts, the SFIO has said. “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,” Indian Express quotes the report as saying. “They were unaware of the effects of these accounting policy changes on the profitability and financials of the company.”
Some of these independent directors, the report continues, have a conflict of interest as they also had business or commercial relationships with the airline and also the UB Group.