UB Group officials grilled on inter-corporate loans

The CBI and the Enforcement Directorate have started the process of questioning several former mid- and senior-officials of the UB Group on issues concerning inter-corporate loans to Kingfisher Airlines.

Sources close to the UB Group told BusinessLine that the first to be questioned were senior officials like former President of the UB Group Ravi Nedungadi and Kingfisher Airlines’ CFO A Raghunathan, who were repeatedly summoned to the offices of the investigating agencies.

The agencies have now started interrogating officials at the level of sectional heads of finance, accounts and legal affairs.

According to CBI sources, the agency has interrogated over 100 KFA officials in connection with Vijay Mallya. More such interrogations will continue for the next few months, they said.

The main line of questioning concerns inter-corporate loans given to Kingfisher Airlines by other UB Group companies. Apparently, inter-corporate loans were provided to the airline at higher interest rate than the working capital provided by the banks.

The investigating agencies sought to know whether these actions had the approval of the board. While in some cases, the board did give its approval, in others it didn’t – though it is mandatory to get board approval for extending these kind of loans.

Sources said that there is a possibility that Mangalore Chemicals & Fertilisers, part of the UB Group, may have secured the necessary approval from the board for extending the loan.

Some of the officials seem to have made a claim that since Kingfisher Airlines had returned the loan with interest, there had been no violation of the norms.

Nor was the loan used for money laundering or buying assets abroad, they claimed. Mallya has repeatedly denied that money from Kingfisher Airlines was used to buy assets abroad.

The investigation agencies had sought several documents from all the officials they questioned. These include tax returns for the past five years, and bank statements of the officials as well as of their close relatives. The agencies are also investigating the overall structure of the financial transactions of the airline. Issues like how each tranche of the loan sanctioned from the banks was utilised by the airline are also being probed.

“They are now looking at every detail even though it is a time-consuming process,” sources said.

PTI reports: The Rajya Sabha Chairman Hamid Ansari today turned down Mallya’s resignation from the House on procedural grounds.“Hamid Ansari, Chairman, Rajya Sabha does not accept the resignation of Vijay Mallya. Secretary General, Rajya Sabha writes to Sh. Mallya that his resignation letter does not conform to prescribed procedures & does not bear signature in original.“As per Rule 213 of RS procedures, the resignation must be voluntary and genuine,” Ansari’s Officer on Special Duty to Gurdeep Singh Sappal said on Twitter quoting from the Secretary General’s letter.

COMMENT NOW