Know How Mallya Used Ghost Companies To Launder Money Overseas
The address on the unkempt marble plaque of a British-era building reads “Pharma Trading Company Private Ltd – 2, Minto Park, Calcutta 700027”. But when you enter the drab compound, the guards reveal there are no offices here. This seemingly unremarkable discrepancy forms the basis of the Enforcement Directorate’s (ED) probe into the shell companies allegedly created by Vijay Mallya, India’s most high-profile “wilful defaulter”, to funnel out portions of loans meant for his now-defunct Kingfisher Airlines.
Pharma Trading Company is among 20 entities, which, according to the ED, exist in the records of the Registrar of Companies, Ministry of Corporate Affairs, but don’t have any active business operations, staff, assets or offices. They were allegedly used by Mallya as vehicles for secret financial transactions, including money laundering.
All the 20 shell companies created by the tycoon are part of the ED charge-sheet filed against Mallya in June this year. The ED also claims that Mallya has created a dozen shell companies across the UK, France, the US, Singapore, Mauritius and the UAE. But the ED has refrained from identifying these foreign shell firms in its prosecution complaint.
Mirror, which last month reported the names of the 20 entities, spent two weeks making enquiries at the registered addresses of seven firms in Kolkata, Bangalore, and Chennai. We also spoke to investigators to learn how they tied these little-known companies to the former liquor baron, who fled to Britain last year after arrest warrants were issued against him over huge unpaid loans.
In some cases, the agency established the link after quizzing the directors of the suspicious entities and in some others they found that Mallya’s family members or people who worked with him at United Breweries Group were listed as directors. For instance, Anil Pisharody, a UB Group executive, is a director at Pharma Trading Company, according to the ED. Mallya’s mother, Lalitha, and son Sidhartha, are named as directors at Gem Investment & Trading Company, which appears to be a legitimate and functional business only on paper.
A senior ED official, who spoke on the condition of anonymity as he is not authorised to comment on ongoing investigations, said: “These ‘paper companies’ were created for a particular purpose by chartered accountants employed by Vijay Mallya. The directors we interviewed told us how they were used as proxies by him.”
Mallya, 61, who is currently living in a £11.5-million mansion near London, owes Indian banks Rs 9,000 crore, which he had borrowed to run Kingfisher Airlines. The Enforcement Directorate holds that the airline had been suffering losses right from its inception, but Mallya kept securing loans by wrongly projecting the carrier’s brand value as Rs 3,406 crore.
Apart from the ED, the Central Bureau of Investigation is also pursuing cases against him, and Indian authorities are seeking his extradition from Britain. A decision is expected next month.
