Is India losing the plot on Vijay Mallya, the failed airline entrepreneur who has lost some of his crown jewels in the booze business while trying to make Kingfisher fly long after it was time to say quits?
As things stand, Mallya’s diplomatic passport has been revoked, the government has asked Britain to deport him, the Rajya Sabha may expel him, the Supreme Court has taken a tough line by asking him to declare his foreign assets, and banks – for fear of being seen as conciliatory to a flamboyant businessman – have been rejecting his offers to settle out of hand. Mallya owes them Rs 9,000-and-odd crore, including accumulated interest.
This is self-defeating. And Mallya has been taking his sob story to the British, and some of the things he has said to the Financial Times in an extended interview make eminent sense.
The key point we have lost sight of is the money. Sending him to jail or bringing him back in chains is hardly the point.
As things stand, Mallya is believed to have offered to pay up around Rs 4,000 crore, and while banks may say it is too little, too late, the question they need to ask themselves is whether they want to salvage some of their money or none at all? Are they getting enough vicarious pleasure out of Mallya’s humiliation to compensate for they monetary losses? One would think not.
It is fair for banks to ask whether Rs 4,000 crore, and the composition of the offer (some money now, most of it later) is fair to them. So this amount is worth haggling over with the playboy-turned-fugitive entrepreneur.
But if they are declining to talk to him purely because they are afraid of being targeted later for doing a sweetheart deal with him, it is time for politicians to step in and clear the air. In the current climate, where businessmen are seen as having got away with murder and politicians are trying to prove they are holier-than-thou, banks do not want to be seen as trying to help a businessman in trouble.
Not talking to Mallya when he wants to settle is double stupidity.
First, for allowing political influence to determine how much money they should lend to a business going steadily downhill after Mallya’s ill-fated purchase of Air Deccan.
Second, for not trying to claw back any of that money back, when, at last, Mallya has been forced to make some offer of repayment. You can doubt if the payment is enough, but a settlement is what banks should go for now.
So when Mallya tells the Financial Times that “by taking my passport or arresting me, they are not getting any money,” he is surely right.
We need to get out of this mindset that every business failure is only the result of crookery or deep financial conspiracy. This may be true of some crony relationships, which India has not lacked, but unless it is possible to prove this beyond doubt, we have to assume that businesses can flop, and money lost by banks.
Mallya is surely stretching the truth when he claims that “we have always been in dialogue with banks saying ‘we wish to settle”, as he told FT. The fact is he was evasive and used every legal loophole to delay the inevitable, including moving the Calcutta High Court against United Bank, which had declared him a “wilful defaulter”. But then delaying tactics are available to everyone. One can hardly fault Mallya alone for using the law to keeps bankers at bay. It was suspected that political influence helped keep them away earlier; now it is banks’ own wariness that may be preventing the recovery of some money.
Neither the government nor banks nor courts should lose sight of the main issue: the money.
The Supreme Court made a huge mistake when, instead of going after Subrata Roy’s money (he owes Sebi over Rs 36,000 crore, which is to be returned to investors in two illegitimate schemes that were scrapped), they incarcerated him in Tihar. The court is still trying to figure out how to get the money in and him out.
With Mallya too, the focus should first be on the money – and if the payment is inadequate, the banks can always request the courts to freeze his domestic assets for recovering whatever else they can from a sale.
If Mallya has broken the law, which could be in terms of delayed provident fund payments or non-payment to employees or the taxman, he can be proceeded against with evidence.
Trying to get him into jail first is pointless. We should be getting at his money. Ask Subrata Roy. The court went for him and his money is still out there, in assets of every kind. What a waste of time and effort when the money was always there for the courts and banks to target!