UB Group denies using Kingfisher loan to buy property

Embattled tycoon Vijay Mallya's UB Group has denied allegations that it used Rs430 crore ($65 million) of bank loans to his now-defunct Kingfisher Airlines to buy property overseas.

Mallya, a Rajya Sabha MP who made his fortune in the liquor business, has been at an unknown location since 2 March after Kingfisher's creditors stepped up pressure to recover the Rs9,000 crore ($1.4 billion) they are owed in loans and interest.

The Enforcement Directorate made the money-laundering allegation against UB Group before a court, and has sought a non-bailable warrant against Mallya, a UB Group spokesman said in a statement late on Sunday.

"The audited accounts of Kingfisher Airlines including for the year ended (March 2010) show all foreign exchange transactions which includes funds borrowed from IDBI Bank were used for legitimate business purposes only," the spokesman said, calling the basis of the warrant against Mallya "erroneous and unjustified".

State-run IDBI Bank is one of Kingfisher's 17 creditor banks.

The government last Friday suspended the diplomatic passport of Mallya, once called the "King of Good Times" for his extravagant lifestyle, and said the passport would be revoked if he did not respond within a week.

Mallya has not disclosed his whereabouts since leaving India, but media reports have traced him to the Hertfordshire village of Tewin, north of London, where he owns a house.