Force India co-owner Mallya cited as ‘wilful defaulter’

Force India team co-owner Dr Vijay Mallya is facing mounting business problems at home after being declared a ‘wilful defaulter’ in a First Information Report issued by the State Bank of India, the largest lender to Mallya’s now-defunct airline Kingfisher which has been grounded since October 2012 and whose assets are in the process of being auctioned off.
According to The Times of India and the International Business Times, the bank’s grievance redressal committee has rejected arguments made by legal representatives for Mallya, the airline and its holding company United Breweries Holdings.
The committee ruled that Mallya’s lawyers could not satisfactorily present a case of genuine distress on behalf of their client and his companies in not paying the money they owe to bankers.
Being declared a ‘wilful defaulter’ by the State Bank of India could mean that Mallya and his businesses will not be able to secure further bank loans from any financial institution in India, and that those banks who have already made loans or invested in the companies could now try and push through a change of management.
Mallya can still challenge the State Bank of India’s declaration of being a ‘wilful defaulter’ in the apex court through review petitions, according to banking experts. However, it’s not the only storm cloud over Mallya and his business operations at the moment.
The Times of India quotes sources saying that India’s Enforcement Directorate – a government law enforcement and intelligence agency responsible for enacting economic laws and fighting financial crime in the country – is reviewing the bank’s FIR with a view to launching a money laundering probe against Mallya and Kingfisher Airlines over allegations that loans from state banks may have been diverted to tax havens such as Cayman Island and Mauritius.
The newspaper goes on to suggest that Mallya’s role as the head of the company is being probed, as initial investigations have pointed to possible misuse of bank capital with funds not used for their originally agreed assigned purpose and loans not being repaid even when resources were available.
The State Bank of India’s ruling does not directly impact the operations of the Force India F1 team, which is joint owned by Mallya and business conglomerate Sahara India Pariwar which is not involved in the airline. However, Sahara’s boss Subrata Roy is himself currently in jail on allegations of not refunding money to investors, with the group unable to raise the 100 billion rupees bail required by the courts to free him while legal action is ongoing.
Force India is understood to currently be in negotiations with car manufacturer Aston Martin and whisky maker Johnnie Walker that could lead to the team changing its name and brand next season, although deputy team principal Bob Fernley said earlier this month that such speculation was “still a little way off.”
Force India has just recruited GP3 racer Alfonso Celis as its new development driver, with the young Mexican set to take part in seven official F1 practice sessions in 2016.

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