Kingfisher loan default: Vijay Mallya can't accuse banks for holding him 'personally responsible'

“I would rather be safe than sorry because I certainly do not want to be at the mercy of some maverick in the government of India,” said billionaire liquor king and co-owner of the Force India Formula One team, Vijay Mallya, currently in UK to avoid prosecution in the Rs 9,000 crore loan default case. Mallya said this in an interview given to Reuters.

Mallya, who alleges that he has become a “political football”, summarises the case against him in India the following way. “The government-owned banks are trying to hold me personally responsible for the failure of India’s largest airline and to repay their debts. I have a counter claim on them as well. That is in the judicial system right now. Recovery of loans made to a PLC is a purely civil matter.”

“The central bureau of investigation, at the behest of the government, converted it into a criminal matter. And then charges of defrauding banks and money-laundering appeared. I will be and am severely contesting all this, legally,” Mallya said.

Vijay Mallya

Vijay Mallya

In other words, all these statements means that Mallya continues to refute every single charge raised against him by Indian government and is determined to put up a strong fight against any attempts to get him back to India and try under Indian laws. And one needn’t be surprised if he wins this battle against the Indian government. If one looks at the past evidence, India hasn’t had much luck in extradition cases with UK.

According to this Hindustan Timesreport, after the India-UK extradition treaty came into effect on 30 December, 1993, so far no high-profile individual wanted by India has been extradited from UK. In the absence of sufficient evidence, Mallya extradition case will epitomise the lack of preparedness of Indian investigators in dealing with high profile loan default case.

According to the billionaire, he is being victim of a conspiracy by banks, investigators and some ‘mavericks’ in the government. They, according to Mallya, want to corner him with false allegations i.e. for defaulting on a loan that, according to him, he is not personally accountable. Mallya has always denied the charge that he is personally responsible for the loan default by his failed airline.

This is also the primary flaw in his argument.

He certainly is personally responsible for the loan default, given that this loan was given against the personal guarantees offered by the billionaire. Banks generously offered large amounts of money to the industrialist drawing comfort from his name and background.

Asked why his bank gave loan to a failing airline, one banker had told this writer, “who could have said no to someone like Vijay Mallya?”. Mallya’s personal charisma worked too well in his favour to get the money his airline needed. So, after the entire loan has become an NPA and a burden on banks’ books, it is not proper for him to wash his hands saying he isn’t personally responsible for this bank money default.

This explains why some bankers allegedly diluted the due diligence process in Mallya’s case while giving the loan which the Central Bureau of Investigation (CBI) has found (read a Times of India report here ) in its investigation. Had it not been Mallya, the flamboyant, super-rich industrialist, banks would not have perhaps loosened their purse strings to put thousands of crores of good money at risk, even turning a blind eye to the prudential norms in place.

The above mentioned ToI report quotes CBI officials saying that IDBI Bank officials, who have been arrested in the Kingfisher Airlines case, diluted the security requirements, adding there were “several instances where the sanction process was weakened to allow loans to a company that was rated sub-investment grade”

But, as this writer has mentioned in earlier columns, the core issue for Indian team negotiating Mallya’s extradition case with UK is that beyond blaming the fugitive in the loan default case, does the Indian government have the much-needed evidence to prove criminality element in the case that is required for the high-profile extradition to happen? This is a key problem since UK-laws are strongly tilted in favour of Mallya in this case. Unless India manages to prove that Mallya defrauded the banks, it will not be easy to convince the UK-authorities to send him back to the home country.

Mallya is hopeful that things will turn in his favour, mainly pinning hopes on this very point. Take a look at his words, “I firmly believe they have absolutely no case against me whatsoever. There is a requirement for legal and judicial determination here in the UK, let them come with whatever evidence they have — but I doubt if they have any evidence — and then let the law take its own course.”

Mallya is indeed personally responsible for the Kingfisher loan default but without strong evidence against him, this case doesn't seem to be going anywhere.


Published Date: Feb 24, 2017 11:03 am | Updated Date: Feb 24, 2017 11:03 am

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