CBI arrests IDBI ex-CMD Yogesh Aggarwal in Rs900-cr Kingfisher loan case
24 January 2017
The CBI on Monday arrested eight people, including former IDBI Bank chairman Yogesh Aggarwal and former CFO of the now-defunct Kingfisher Airline', A Raghunathan, in a case related to defaulting of a Rs900 crore loan seven years ago.
The CBI also arrested IDBI Bank's ex-deputy managing director O V Bundellu and two other officials, SKV Srinivasan and R S Sridhar. KFA executives Shailesh Borkar, AC Shah and Amit Nadkarni were among the eight arrested.
The nine people who were arrested on charges pertaining to criminal breach of trust, criminal conspiracy and criminal misconduct, would be presented before the CBI court in Mumbai.
The CBI team conducted searches at 11 places, including Mallya's residence, 3 floors of UB Towers in Bengaluru, residence of Yogesh Aggarwal and Raghunathan among others. "A CBI team visited UB Group offices in Bengaluru and we are fully cooperating with them," UB group spokesperson said in a statement.
As per the first information report filed by the CBI against liquor barn Vijay Mallya in July 2015, some officers of IDBI Bank had shown undue favour to Kingfisher Airlines in sanctioning Rs900 crore loan. The FIR had named Vijay Mallya and unknown IDBI Mumbai officers.
In its preliminary investigation report, CBI had reported collusion between bank officials and KFA and Mallya diverted the loan amount abroad on false claims. Loans were sanctioned and disbursed by IDBI Bank to Kingfisher Airlines at various times in 2009.
A Raghunathan, CFO, Kingfisher Airlines, had made a proposal for the sanction of a corporate loan of Rs950 crore which was marked for the attention of BK Batra (IDBI Bank official). Raghunathan referred to a meeting between Mallya and Aggarwal in a letter dated 6 October 2009, and requested the bank to lend the airline Rs150 crore for six months to pay overseas vendors.
A memorandum put up to the credit committee of the bank was approved and the loan sanctioned despite the company having a negative net worth and not satisfying the corporate loan policy of the bank. The credit committee comprising Batra, Bundellu and Bansal sanctioned the loan on 7 October 2009.
Moreover, Raghunathan, again referring to Mallya's meeting with Agarwal, also sought an ad hoc release of Rs200 crore. The proposal was put up to the corporate banking head, Batra, who recommended that the bank's CMD could approve it. A few days later, on 4 November 2009, IDBI Bank sanctioned a short-term loan of Rs200 crore, subsumed in the total loan. The sanction came from Yogesh Aggarwal.
As per the CBI report, these loans were disbursed while the original proposal for a corporate loan of Rs950 crore was pending. The proposal was put up again before the credit committee on 19 November 2009. On 27 November, IDBI Bank released a corporate loan of Rs750 crore, which was sanctioned by Bundellu, Batra and Srinivasan.
According to CBI, Aggarwal "approved the proposal while instructing for expediting the ratings though the auditors of the company had observed that funds aggregating to Rs4,630 crore raised on short-term basis were used for long-term purposes. Undisputed TDS amount of Rs100 crore plus was not deposited for over six months and the ratings were not available."
The CBI observed that the loans were approved by accepting as security the hypothecation and assignment of the Kingfisher brand, aircraft finance lease, a corporate guarantee from United Breweries Holdings and a personal guarantee from Mallya.
The CBI report said Rs263.48 crore of the loan disbursed by IDBI Bank was transferred to KFA's accounts in Axis Bank, ICICI Bank and Bank of Baroda from where funds were transferred to other KFA accounts. "This Rs263 crore was never used for the purpose it was sanctioned by IDBI Bank, to meet obligations to overseas vendors".
The report concluded saying, "A major chunk of the funds transferred to Axis Bank were used for foreign remittances towards lease rentals, purchase of aircraft parts, etc. Since these remittances have gone outside the country, further inquiry can only be made by sending Letter Rogatory (LR) for foreign investigation."
The CBI team has taken all these accused to Mumbai office to present before the CBI court, seeking 14-day remand. Meanwhile, the Enforcement Directorate (ED) is also investigating the case, in fact, statements of few officials have been recorded, till now.