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How Vijay Mallya Splurged Public Money On IPL Team Venture

New Delhi, June 13, 2017 - A chain of emails accessed by India Today from the servers of United Spirits Limited point to his possible involvement in hoodwinking banks to promote his IPL venture, the Royal Challengers Bangalore.

Contemptuously dismissive of accusations of fraud, Vijay Mallya threw a party for himself barely months before he left India under a pile of debts.

But now India Today has obtained clinching evidence that the self-proclaimed"King of Good Times" might find a bit too difficult to shrug off.

A chain of emails accessed India Today from the servers of United Spirits Limited point to his possible involvement in hoodwinking banks to promote his IPL venture, the Royal Challengers Bangalore.

Incriminating notes suggest the beer-and-airline magnate and his core management might have deliberately taken away money they borrowed from SBI to fund his IPL team.

Last February, Vijay Mallya resigned as chairman and non-executive director of Royal Challengers Sports Private Limited (RCSPL), which runs the RCB.

According to internal emails, bank officials objected strongly to Kingfisher's attempts to divert public funds to Mallya's non-aviation venture.

But the tycoon's men found ingenious ways of using taxpayers' money to finance their boss' IPL high.

In April 2008, SBI sanctioned Rs 500 crore as a credit facility to loss-making Kingfisher Airlines, just days after Mallya had announced acquisition of a 26% stake in Air Deccan for a whopping Rs 550 crore.

By this time, Kingfisher was bleeding badly, with a total loss of about Rs 1,200 crore.
That was also the year when Vijay Mallya splashed into the glitzy world of the Indian Premier League.

In January, 2008, he bought the most expensive IPL franchise of inaugural edition, the Royal Challengers Bangalore, for Rs 476 crore.

Email conversations between him and his chief financial officer A. Raghunathan from 2009, accessed by India Today, suggest how Kingfisher Airlines tried to pump its bank loans into Mallya's IPL project.

Between April 30, 2009 and May 4, 2009, the company attempted to pay Rs 15.9 crore to Royal Challengers Bangalore, using the money it borrowed from SBI.

Kingfisher Airlines, its email records show, issued a total of 77 cheques as payment to various vendors.

Out of them, SBI officials cleared 76, but rejected one amounting to Rs 15.9 crore favouring Royal Challengers Sports Pvt Limited.

Bank officials told the Kingfisher management that money borrowed from SBI could only be used for payments airline-related expenses.

On May 5, 2009, CFO Raghunathan wrote an email to his boss, whom he addressed as VJM, to explain to him the situation.

"It has been an absolute nightmare dealing with the SBI officials who have taken upon themselves the job of conducting a pre-audit on all the payment requests made by us," Raghunathan wrote.
"Although we have issued a cheque to USL (Royal Challengers Sports Pvt Limited) for Rs 15.90 crores as part of 77 cheques which we issued to various marketing vendors... While SBI honoured 76 cheques aggregate to about Rs 10 crores, they have refused to honour the cheque issued to Royal Challengers Sports Private Limited," reads his email.

Raghunathan complained to his boss that an SBI official"made a snide remark that why is Kingfisher Airlines sponsoring IPL when the airline is incurring huge losses".

"After several rounds of cajoling and pleading, SBI now says they will make payments only to vendors connected with the aviation sector," he said in his email accessed by India Today.

Nevertheless, Raghunathan appeared to be in no mood to accept a no from the bank.

He promised his employer that he would find a way out to circumvent bank restrictions.

"I am meeting Sabapathy (Head of SBI Branch which processed KAL loan) tomorrow at Bangalore and will find out a solution for the payment of Rs 15.90 crores to USL," the CFO wrote.

Corroborative evidence suggests the airline management might have used ingenious ways to bypass bank conditions.

First, Kingfisher Airlines made a payment of Rs 26 crore on May 2,2009 from its current account in Deutsche Bank to UCO Bank, according to highly-placed officials investigating the case.

UCO then transferred Rs 24.30 crore to various banks as airport payments for Delhi, Mumbai, Bangalore and Hyderabad.

On May 5, 2009, Kingfisher Airlines wrote to SBI request reimbursement of Rs 24.30 crore into its UCO Bank account, which the state-run lender did a day later.

On May 7, 2009, UCO remitted Rs 16 crore into the Kingfisher Airlines' current account at Deutsche Bank.

And on May 10 2009, Deutsche transferred Rs 15.9 crore into Royal Challengers Bangalore's SBI account, the top-most official sources revealed.

When this suspected hoodwinking was in progress, A Raghunathan, Kingfisher Airlines' CFO, shot off one more email to Vijay Mallya.

On May 7 at 2:20 PM, he wrote:"As indicated in my mail of May 5, 2009 we have found a way to take the money from SBI to complete the pending transaction. By tomorrow we hope to complete the transaction."

India Today's scoop in the Mallya case, one of the worst examples of corporate borrowing binge, comes a day ahead of his scheduled hearing in a Westminster court in connection with New Delhi's request for his extradition.

An investigating officer from the CBI, top sources said, was on his way to attend the proceedings in London.

The Crown Prosecution will be handling the arguments in the extradition case on behalf of the Indian government. CBI officials have briefed the lawyers of the crown prosecution.

Investigators believe that the emails and bank account details accessed by India Today will play a critical role in proving that Mallya deliberately defrauded SBI, India's leading public-sector bank.

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