Industrialist Vijay Mallya, in an interview to UK-based Financial Times, said that “by taking my passport or arresting me, they will not get any money.” It’s time the Indian government called Mallya’s bluff and brings him back to face justice.
In his first media interview since he flew to UK, Mallya gave his side of the story where he plays the victim card. His statements are unlikely to gain him sympathy either from the government or the courts, because both now seem to have run out of patience.
We counter five points raised by Mallya in the interview:
1. I can't return to India because I don't have a passport: The Minister of External Affairs revoked Mallya’s passport at the request of the Enforcement Directorate’s (ED). Mallya’s passport was suspended for four weeks. Though Mallya claims he cannot come to India as he does not have a passport, very few believe he will, especially when he did not bother attending the court despite three summons. In any case, India has asked for Mallya’s deportation which can be worked out through diplomatic channels and issuance of a one-side passport.
2. Forget about the money in case of an arrest or revocation passport: It’s easy for Mallya to give interviews from an air-conditioned room and talk of not giving money. All Mallya has to do is look at his one-time partner in his F1 racing time, Subrata Roy of Sahara. Roy is still trying to collect money to walk out of jail even after spending two years in it. It's time for Mallya to understand that once the law of the land catches up with you, there is no escaping it.
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3. I'm not flamboyant: An employee of Mallya’s erstwhile Kingfisher Airlines will be a best judge of that. While Kingfisher employees were protesting on streets Mallya continued with his splashy lifestyle and even attended those cricket matches played by his team, Royal Challengers Bangalore. Despite owning banks Rs 9,000 crore, Mallya flew down international pop icon Enrique Iglesias for his 60th birthday bash in Goa. Surely, not the way a humble person celebrates his birthday. Voices of celebrations from Mallya’s birthday bash was heard by RBI governor Raghuram Rajan, which made him comment that rich businesses owing large sums to banks should behave and not flaunt "massive birthday bashes" while still in serious debt.
4. Willing to settle bank loans, but at a reasonable number: It is not as simple as it seems. Firstly, Mallya is disputing the amount in question. He said in the interview that the ‘actual principal borrowed’ was a little over 500 million pound (around Rs 4,868 crore at the current exchange rate), while interest in 2013, when the legal skirmishes over repayment began was 120 million pound (around Rs 1,168 crore). The Indian banks claim Mallya owes them around Rs 7,000 crore in principal and Rs 2,000 crore in interest. Secondly, Mallya says he has to pay others as well for which banks should accommodate. Thirdly, Mallya says bankers declined his offer for settlement. Mallya’s offer for settlement at less than half the amount is difficult for the banks to digest, especially when the issue is now being politicised. Lenders by definition have the first charge on recovery, after which creditors get their money and finally if any is left shareholders can lay their claim. These are established norms which Mallya has to adhere to.
5. Indian banks have sold other non-performing loans at 30-40% of the book value: Mallya is correct in saying that banks have sold non-performing loans to asset reconstruction companies at 30-40 per cent of their book value. But these companies had tangible assets in their books. In the case of Kingfisher Airlines, one of the biggest assets was its brand. The Serious Fraud Investigation Office (SFIO) found out that Kingfisher sought loan based on its brand being valued at Rs 4,100 crore. When the banks did the maths, the valuation was found to be only Rs 160 crore. Kingfisher’s book value was clearly inflated.
Mallya might try to play the victim, but the facts do not support him. It is a fit case for crony capitalism and a test of the government to show where it stands in dealing with loan defaulters.