UK red-flagged Vijay Mallya’s Rs 170 crore Swiss bank transfer, but lenders failed to act

Around four months after the Central Bureau of Investigation (CBI) downgraded a Look Out Circular (LOC) for liquor baron Vijay Mallya, British authorities had red-flagged to his lenders an Rs 170 crore transfer Mallya made to a bank in Switzerland, according to a report by The Indian Express.

The bank, however, did not act on the legal advice they had received to restrain him when he flew back to London, the report suggests.

According to the report, United Kingdom’s Financial Intelligence Unit (UKFIU) on June 28, 2017, had communicated to Indian investigating agencies, which led to Mallya’s 13 lenders move to form a consortium and jointly move towards freezing of his assets in the UK.

Subsequently, a Worldwide Freezing Order (WFO) was issued against Mallya in the UK in November last year.

The report adds that Mallya’s bank transfer was converted into a Suspicious Activity Report (SAR) by the UKFIU. The information was sent to the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED).

According to the report, UK authorities had then advised the Indian agencies to restrain Mallya from disposing off his assets and asked lending banks to extend enforcement of the Debt Recovery Certificate (DRC) by a Bengaluru tribunal in February 2017.

The Rs 170 crore bank transfer to Switzerland could not be blocked because of the time taken by lenders.

Mallya, however, lost control of his UK assets valued at around 1.14 billion pounds because of a legal challenge through the WFO. The CBI had in November 2015, downgraded the LOC, seeking to merely be informed about his entry or exit from the country and not detain him.

On September 18, the CBI said the first LOC issued against the embattled businessman for his detention at airport was not sustainable by law and needed correction as there was no warrant against him at that time.

The agency reiterated its position that there were no grounds to arrest Mallya on November 24, 2015 when he returned from London on the basis of the LOC issued on October 16, 2015 calling for his detention, agency sources told PTI.