Vijay Mallya could be on Interpol’s wanted notice. Here’s why
Abhishek Sharan, Hindustan Times, New Delhi |
Updated: Mar 10, 2016 12:49 IST
The CBI is examining the circumstances under which Mallya left India despite the LOC being active at all exit points, including airports, a fact that points at “shocking lapses” by the concerned authorities, said an agency source. (Hindustan Times)
Liquor baron Vijay Mallya, who left India last Wednesday in spite of a Look Out Circular (LOC) against him for his alleged role in the Rs 9,000 crore loan default case, could face actions including attachment of his assets worth thousands of crores and Interpol’s ‘wanted’ notice.
The IDBI bank loan default case is being probed by the Central Bureau of Investigation (CBI) since October last year and on Monday, the Enforcement Directorate (ED) registered a First Information Report in the case under the provisions of the Prevention of Money Laundering Act.
The CBI is examining the circumstances under which Mallya left India despite the LOC being active at all exit points, including airports, a fact that points at “shocking lapses” by the concerned authorities, said an agency source.
The central probe agency confirmed on Wednesday that Mallya left India on March 2, probably for the UK. Attorney General (AG) Mukul Rohatgi informed the Supreme Court on Wednesday about his status.
The AG had on Tuesday sought an urgent hearing of a petition filed by 17 public sector banks, including the State Bank of India, seeking to restrain Mallya from leaving India and impounding his passport. On Monday, the Debt Recovery Tribunal (DRT) barred him from accessing the Rs 515 crore settlement he reached with Diageo.
“The CBI’s probe against Vijay Mallya in the Rs 900 crore loan default case involving IDBI is under investigation and we questioned him thrice since October 2015. The probe is document-based that records the irregularities, but if and when the CBI summons him again for questioning and he does present himself, appropriate legal actions will be taken,” a CBI officer said.
“The CBI will first give him a few opportunities to join the probe after which we will get an Interpol Red Corner Notice against him via judicial channels,” he said.
“Through the RCN, CBI will seek the assistance of the Interpol to get Mallya detained or arrested by local authorities of wherever he might be, to be brought back to India via deportation for joining the due process of law, ” the officer added.
He said the CBI is still examining how Mallya, an Independent member of Rajya Sabha from Karnataka, could bunk the LOC. “It’s also a fact that he does go abroad frequently for work purposes,” said the source.
The agency is also examining if there was a lapse in not requesting authorities for the impounding of Mallya’s passport even if “Mallya was co-operating in terms of making himself available for questioning,” said another agency source.
“The Look Out Circulars are opened to trace the absconding criminals and also to prevent and monitor effectively the entry or exit of persons who may be required by law enforcement authorities mentioned by it from leaving the country’s borders,” said the source.
Last October, the CBI had registered an FIR naming Mallya and former KA chief financial officer A Raghunathan for allegedly not returning a Rs 900 crore loan taken from the Mumbai-based public sector IDBI bank. The FIR also mentioned unknown IDBI officials who allegedly colluded with the accused defaulter.
The ED, on the other hand, is likely to target such assets of Mallya’s that could be proven as “proceeds of crime in the period, when the loan was taken that is during 2006 to 2012,” said an ED source. The source said the ED may move to get assets equal to the amount of the crime’s proceeds, which is Rs 900 crore in the IDBI case, attached with the trial court’s permission.
“ED has just registered a PMLA case against Mallya and his defunct airlines company and the investigations are yet to reach the stage where the agency could have requested for impounding of his passport,” said the source.
The source said when required the ED will summon Mallya thrice to give him sufficient opportunities to join the probe.
“If he chooses not to present himself before for questioning, ED will move the court against him for non-compliance and get his assets, which may be proceeds of the alleged crime, attached,” he said.
“Because of the PMLA case, ED will be more interested in his assets, the proceeds of crime, than the accused himself.”
The CBI had searched Mallya’s residential and official premises in October 2015 in Mumbai, Goa and Bengaluru and questioned him in December. It is also likely to widen its probe against Mallya’s long grounded Kingfisher Airlines (KA) by taking alleged defaults on additional loans worth Rs 3100 crore from 10 more public sector banks under its scanner.
The CBI is also likely to seek help from overseas authorities to verify allegations of “unspecified diversion” of a portion, equivalent to around $200 million, of the total loan sum to tax havens. Cayman Island and Mauritius are among the tax havens under the agency’s scanner, according to a CBI source.
The agency is scrutinising records connected with the recent categorisation of KA as an alleged “willful defaulter” by three public-sector banks - State Bank of India, Punjab National Bank and United Bank.
The CBI has asked IDBI to explain why it gave the loan to the airline, ignoring its own internal report and a board member’s reservations that had allegedly warned against such a step. The debt-laden airlines stopped operations in October 2012.
It will also examine if the loan was diverted to unspecified purposes including management of T-20 cricket teams in the Indian Premier League and the Caribbean Premier League.
-----------------------------------
Mallya was in RS on 1 March, he left on 2nd: Here are the pores in system that let him go
The Vijay Mallya episode proves once again that our system takes a soft approach towards the cronies.
A look at the sequence of events over the last few days shows that Mallya was not even playing a catch-me-if-you-can game with the government, banks, investigative authorities and the judiciary. It is just that the system has enough pores for people like Mallya to escape.
Vijay Mallya. AFP
Here's how it all unfolded:
1) On 26 February, Vijay Mallya announces his sweethheart deal with Diageo. The agreement is that he will be paid Rs 515 crore ($75 million) as the severance package. He also resigned as chairman and director of United Spirits, agreed not to compete with Diageo in spirits business the world over for the next five years and not to interfere in its Indian arm's business matters. Mallya was to get an initial payment of $40 million. The balance was to be paid over five years, said a ToI report. In a statement, he also said he wants to move to London to spend time with his kids.
2) On 27 February, fearing Mallya may move out of the country without repaying the Rs 2,000 odd crores he had taken from it, SBI rushes to the Debt Recovery Tribunal in Bangalore. The bank wanted to advance the hearing on its original application filed in June 2013 (nearly three years back) for recovery of the loans it and 16 other state-run and private banks advanced to Kingfisher Airlines during 2004-12. However, an IANS report says SBI, when it approached the DRT, was not aware of Diageo's part payment to Mallya. "We were not aware that Diageo had paid Mallya $40 million and even Mallya's counsel (Uday Holla) did not tell the tribunal during arguments on March 4 about the payment. We will seek action against him (Mallya) for suppressing the fact," SBI counsel told IANS.
3) On 1 March, Mallya attends Rajay Sabha.
4) On 2 March, the SBI files four interlocutory applications in the tribunal after CBI director Anil Sinha expressed concern over its delay in acting against Mallya. The bank sought to impound Mallya's passport, get him arrested, secure the lenders' first right on the payout from Diageo and getting full disclosure of his assets in the country and abroad.
4) On 2 March, Mallya flies out of India, as has been revelealed by attorney general Mukul Rohatgi in The Supreme Court on Wednesday. This he manages despite the look-out notice issued by the CBI. Look-out notices are issued to alert immigration authorities to prevent any move of a person facing probe from leaving the country. "We cannot arm twist a bank in terming a loan default as fraud. We can only advice them which we have done. It is up to banks now to give us complaints based on which we can act," a senior CBI official has been quoted as saying in a PTI report. The report also notes that Mallya managed to escape though he notice was issued to all exit points from the country aimed at preventing the Rajya Sabha MP from moving out. Interestingly, much of the action in the drama has happened after he left the country.
5) On 6 March, Mallya issued a statement accusing media of sensationalism. He also said he was neither an absconder nor a defaulter. "I have been most pained as being painted as an absconder – I have neither the intention nor any reason to abscond. I have been a non resident for almost 28 years and the Reserve Bank of India has acknowledged this in writing. Over the years, I have built successful businesses in India and abroad. I am also honoured to be a member of the Rajya Sabha," he said. It now turns out that the statment was issued after he left the country.
6) On 7 March, the DRT ruled that Diageo should not give $75 million to Mallya until its next hearing which was posted on 28 March, a good 21 days later, giving probably enough time for the tycoon to think about his next move and act. But it now turns out that the order never reached Diageo. "We understand that the Debt Recovery Tribunal is in the process of issuing an interim order, which we will review once the full details are available," the Diageo spokesperson has told IANS.
7) On 7 March, Enforcement Directorate also registers money laundering case against Mallya. "Mallya and others will soon be questioned. The agency has collected relevant documents from concerned authorities and the bank in question," ED sources told PTI. The agency may have to put the questioning on hold now, as he has already left the country.
8) On 8 March, probably after banks found that the DRT order was not going to help them, they approached the Supreme Court to block Mallya from leaving the country. The court listed the case to be heard on 9 March.
9) On 8 March, corporate affairs minister Arun Jaitley said in written reply to a Rajya Sabha question that a Serious Frauds Investigation Office investigation into alleged fund diversion by Kingfisher Arilines is underway.
10) On 9 March, AG informs the court that Mallya had left the country already on 2 March. The court issues notice to Mallya to be present with passport in the court on 30 March, the date it will hear the case next.
11) On 9 March, the Maharashtra sales tax department also woke up and filed a plea in the Bombay High Court seeking recovery of dues worth nearly Rs 60 crore from Kingfisher.
12) On 9 March, a Delhi court fixed 24 April for hearing the final arguments in a case against Mallya for allegedly evading summons issued by the Enforcement Directorate in connection with alleged violation of foreign exchange rules.
Clearly, there are gaping holes in the system which need to be filled in at the earliest. It may be coincidental that the developments happen at a time when the Parliament session is on. But it should prompt the politicians, who are now engaged in a blame game over Mallya, should take note and act fast.
Narayanan Madhavan, Hindustan Times |
Updated: Mar 10, 2016 08:26 IST
Vijay Mallya has been in the dock ever since his ambitious airline venture Kingfisher landed in financial troubles and got eventually grounded in October 2012. (PTI)
When you speak of Vijay Mallya, horses and stud farms may just be the right examples to illustrate his elegant movements.
Perhaps we should be asking banks that wanted him held back in India to recover whatever money they can recover from him arising from loan defaults by Kingfisher Airlines he founded and grounded: Has the horse bolted the stable?
Well, anyone with horse sense will know by now that the beer baron’s financial condition is not quite, er, stable. Unless you count his personal wealth that spans everything from race horses and football clubs to a sword used by Tipu Sultan.
We should not also forget a pair of Mahatma Gandhi’s spectacles he owns. Partly because he is usually seen in designer shades, and not the round, rimless variety worn by the Father of the Nation in his austere way. Austerity is not something you associate with Mallya anyway.
Read Mallya misled govt, employees: Former women staff of Kingfisher Airlines
Attorney General Mukul Rohatgi, representing the consortium of banks to whom the baron owes about Rs 7,000 crore, has informed the Supreme Court that Mallya left India on March 2 – days before headlines screamed the banks wanted him held back.
The man may be in one of the castles he owns in Scotland, or who knows, in his apartment in Manhattan’s swank Trump Towers, where he might just bump into Donald Trump and improve future bilateral relations with the US, just in case the xenophobic Republican gets elected. Something tells us the two will just get along fine.
Read more: Vijay Mallya left country in spite of look-out notice against him by CBI
But hey, how does he manage to lord over all that wealth while the bankers are after him?
Now, the magic lies in the thing called the limited liability company. So, when you borrow from a “limited” company, your personal liability in repaying any money owed by the company you may virtually own is limited. And, as you wonder about the nuances of how banks can claim only the assets you pledge and not what you own in general, please do take a moment to think of economist John Maynard Keynes, who once famously said: “If you owe your bank manager a thousand pounds, you are at his mercy; if you owe him a million pounds, he is at your mercy.”
Mallya’s case is quite different from the Satyam scandal, where founder Ramalinga Raju admitted to doctoring accounts and went to jail. The nuance of the law is different when you default – as distinct from an act of fraud.
So Mallya’s stud farms and ear studs alike can stay intact, and he does not have to auction his Bulgari/Maybach shades, not to speak of Mahatma Gandhi’s spectacles.
Come to think of it, Mallya doesn’t need those Gandhi glasses. You know, he is pretty good at making a spectacle of himself.
Did lenders flout rules while pledging the KFA brand for loans?
Beena Parmar and Ramsurya Mamidenna, Hindustan Times, Mumbai |
Updated: Mar 08, 2016 23:19 IST
A file photo of a Kingfisher Airlines customers waiting at a check-in queue at Mumbai's domestic airport.
The move to pledge the Kingfisher Airlines brand with IDBI Bank to raise around Rs 900 crore has raised questions since this is not a common method for lenders to extend loans, as intangible assets do not offer a clear estimate of future cash flows.
The development has also fuelled suspicion that prudential norms were not followed in the pledging of the brand as collateral, prompting the CBI to include this aspect in its probe on whether norms were deliberately overlooked while extending loans to Kingfisher Airlines (KFA).
While IDBI Bank and KFA did not comment on the issue, a senior official with a public sector bank said: “Brand as a security is not regularly accepted by banks for extending loans. While sanctioning working capital loans for a functioning firm, primary security is the only pledge and collateral is only an additional security.”
Primary security is in the form of stocks and book debts, and the security requirement is based on risk perception of the official evaluator.
“There are various parameters that are followed in evaluating a brand, with its potential in determining future cash flows, being the most important,” said Darshana Kadakia, partner, valuations with Grant Thornton.
While it is reported that Grant Thornton did the valuation for Kingfisher Airlines brand, a spokesperson did not comment citing client confidentiality.
It has been reported that IDBI Bank had lent about Rs 900 crore on the Kingfisher Airlines brand, quite high compared to other such cases. Also, in 2012-13 when the loan was extended, the airline had started making losses.
“If one were to consider an example, during the sale of Wockhardt’s protein business to Danone, during the same time period, the total valuation of the deal was pegged at Rs 1,500 crore, of which the brand valuation was Rs 250 crore. Wockhardt was a profit-earning company,” said an auditor who inspected Wockhardt’s books.
Mallya owes around Rs 7,000 crore in dues to a consortium of 17 lenders led by SBI.
According to another auditor, banks take a risk by extending loans on a brand. “In a construction company, you may have a right to collect toll for 30 years. That also is an intangible asset, but at least there is a visible project on hand. Here that is not the case.”
PTI, New Delhi |
Updated: Mar 08, 2016 23:36 IST
In an open letter, the women employees also accused Vijay Mallya of ’killing’ two airlines and rendering hundreds of people jobless.
Questioning his silence over non-payment of salaries to hundreds of employees of the now-defunct Kingfisher Airlines, a group of former women staffers has accused Vijay Mallya of misleading the government and employees over a revival plan.
In an open letter, which comes on the occasion of International Women’s Day, the women employees also accused the beleaguered industrialist of “killing” two airlines and rendering hundreds of people jobless.
“You say that you are not a defaulter. But you confidently told us during the meeting that banks won’t be able to recover more than 5-10% of debt amount. That speaks volumes of your malicious intentions.
“In the same meeting, you promised revival, payment of our salary... This clearly means that you had no intention of reviving the airline while you kept submitting misleading revival plans to banks/DGCA,” the women staffers alleged in the letter.
According to sources, nearly 700 of the 1,500 employees, who still claimed to be on the payroll of the defunct airline, are women.
Abhishek Sharan, Hindustan Times, New Delhi |
Updated: Mar 10, 2016 12:49 IST
The CBI is examining the circumstances under which Mallya left India despite the LOC being active at all exit points, including airports, a fact that points at “shocking lapses” by the concerned authorities, said an agency source. (Hindustan Times)
Liquor baron Vijay Mallya, who left India last Wednesday in spite of a Look Out Circular (LOC) against him for his alleged role in the Rs 9,000 crore loan default case, could face actions including attachment of his assets worth thousands of crores and Interpol’s ‘wanted’ notice.
The IDBI bank loan default case is being probed by the Central Bureau of Investigation (CBI) since October last year and on Monday, the Enforcement Directorate (ED) registered a First Information Report in the case under the provisions of the Prevention of Money Laundering Act.
The CBI is examining the circumstances under which Mallya left India despite the LOC being active at all exit points, including airports, a fact that points at “shocking lapses” by the concerned authorities, said an agency source.
The central probe agency confirmed on Wednesday that Mallya left India on March 2, probably for the UK. Attorney General (AG) Mukul Rohatgi informed the Supreme Court on Wednesday about his status.
The AG had on Tuesday sought an urgent hearing of a petition filed by 17 public sector banks, including the State Bank of India, seeking to restrain Mallya from leaving India and impounding his passport. On Monday, the Debt Recovery Tribunal (DRT) barred him from accessing the Rs 515 crore settlement he reached with Diageo.
“The CBI’s probe against Vijay Mallya in the Rs 900 crore loan default case involving IDBI is under investigation and we questioned him thrice since October 2015. The probe is document-based that records the irregularities, but if and when the CBI summons him again for questioning and he does present himself, appropriate legal actions will be taken,” a CBI officer said.
“The CBI will first give him a few opportunities to join the probe after which we will get an Interpol Red Corner Notice against him via judicial channels,” he said.
“Through the RCN, CBI will seek the assistance of the Interpol to get Mallya detained or arrested by local authorities of wherever he might be, to be brought back to India via deportation for joining the due process of law, ” the officer added.
He said the CBI is still examining how Mallya, an Independent member of Rajya Sabha from Karnataka, could bunk the LOC. “It’s also a fact that he does go abroad frequently for work purposes,” said the source.
The agency is also examining if there was a lapse in not requesting authorities for the impounding of Mallya’s passport even if “Mallya was co-operating in terms of making himself available for questioning,” said another agency source.
“The Look Out Circulars are opened to trace the absconding criminals and also to prevent and monitor effectively the entry or exit of persons who may be required by law enforcement authorities mentioned by it from leaving the country’s borders,” said the source.
Last October, the CBI had registered an FIR naming Mallya and former KA chief financial officer A Raghunathan for allegedly not returning a Rs 900 crore loan taken from the Mumbai-based public sector IDBI bank. The FIR also mentioned unknown IDBI officials who allegedly colluded with the accused defaulter.
The ED, on the other hand, is likely to target such assets of Mallya’s that could be proven as “proceeds of crime in the period, when the loan was taken that is during 2006 to 2012,” said an ED source. The source said the ED may move to get assets equal to the amount of the crime’s proceeds, which is Rs 900 crore in the IDBI case, attached with the trial court’s permission.
“ED has just registered a PMLA case against Mallya and his defunct airlines company and the investigations are yet to reach the stage where the agency could have requested for impounding of his passport,” said the source.
The source said when required the ED will summon Mallya thrice to give him sufficient opportunities to join the probe.
“If he chooses not to present himself before for questioning, ED will move the court against him for non-compliance and get his assets, which may be proceeds of the alleged crime, attached,” he said.
“Because of the PMLA case, ED will be more interested in his assets, the proceeds of crime, than the accused himself.”
The CBI had searched Mallya’s residential and official premises in October 2015 in Mumbai, Goa and Bengaluru and questioned him in December. It is also likely to widen its probe against Mallya’s long grounded Kingfisher Airlines (KA) by taking alleged defaults on additional loans worth Rs 3100 crore from 10 more public sector banks under its scanner.
The CBI is also likely to seek help from overseas authorities to verify allegations of “unspecified diversion” of a portion, equivalent to around $200 million, of the total loan sum to tax havens. Cayman Island and Mauritius are among the tax havens under the agency’s scanner, according to a CBI source.
The agency is scrutinising records connected with the recent categorisation of KA as an alleged “willful defaulter” by three public-sector banks - State Bank of India, Punjab National Bank and United Bank.
The CBI has asked IDBI to explain why it gave the loan to the airline, ignoring its own internal report and a board member’s reservations that had allegedly warned against such a step. The debt-laden airlines stopped operations in October 2012.
It will also examine if the loan was diverted to unspecified purposes including management of T-20 cricket teams in the Indian Premier League and the Caribbean Premier League.
-----------------------------------
Mallya was in RS on 1 March, he left on 2nd: Here are the pores in system that let him go
The Vijay Mallya episode proves once again that our system takes a soft approach towards the cronies.
A look at the sequence of events over the last few days shows that Mallya was not even playing a catch-me-if-you-can game with the government, banks, investigative authorities and the judiciary. It is just that the system has enough pores for people like Mallya to escape.
Vijay Mallya. AFP
Here's how it all unfolded:
1) On 26 February, Vijay Mallya announces his sweethheart deal with Diageo. The agreement is that he will be paid Rs 515 crore ($75 million) as the severance package. He also resigned as chairman and director of United Spirits, agreed not to compete with Diageo in spirits business the world over for the next five years and not to interfere in its Indian arm's business matters. Mallya was to get an initial payment of $40 million. The balance was to be paid over five years, said a ToI report. In a statement, he also said he wants to move to London to spend time with his kids.
2) On 27 February, fearing Mallya may move out of the country without repaying the Rs 2,000 odd crores he had taken from it, SBI rushes to the Debt Recovery Tribunal in Bangalore. The bank wanted to advance the hearing on its original application filed in June 2013 (nearly three years back) for recovery of the loans it and 16 other state-run and private banks advanced to Kingfisher Airlines during 2004-12. However, an IANS report says SBI, when it approached the DRT, was not aware of Diageo's part payment to Mallya. "We were not aware that Diageo had paid Mallya $40 million and even Mallya's counsel (Uday Holla) did not tell the tribunal during arguments on March 4 about the payment. We will seek action against him (Mallya) for suppressing the fact," SBI counsel told IANS.
3) On 1 March, Mallya attends Rajay Sabha.
4) On 2 March, the SBI files four interlocutory applications in the tribunal after CBI director Anil Sinha expressed concern over its delay in acting against Mallya. The bank sought to impound Mallya's passport, get him arrested, secure the lenders' first right on the payout from Diageo and getting full disclosure of his assets in the country and abroad.
4) On 2 March, Mallya flies out of India, as has been revelealed by attorney general Mukul Rohatgi in The Supreme Court on Wednesday. This he manages despite the look-out notice issued by the CBI. Look-out notices are issued to alert immigration authorities to prevent any move of a person facing probe from leaving the country. "We cannot arm twist a bank in terming a loan default as fraud. We can only advice them which we have done. It is up to banks now to give us complaints based on which we can act," a senior CBI official has been quoted as saying in a PTI report. The report also notes that Mallya managed to escape though he notice was issued to all exit points from the country aimed at preventing the Rajya Sabha MP from moving out. Interestingly, much of the action in the drama has happened after he left the country.
5) On 6 March, Mallya issued a statement accusing media of sensationalism. He also said he was neither an absconder nor a defaulter. "I have been most pained as being painted as an absconder – I have neither the intention nor any reason to abscond. I have been a non resident for almost 28 years and the Reserve Bank of India has acknowledged this in writing. Over the years, I have built successful businesses in India and abroad. I am also honoured to be a member of the Rajya Sabha," he said. It now turns out that the statment was issued after he left the country.
6) On 7 March, the DRT ruled that Diageo should not give $75 million to Mallya until its next hearing which was posted on 28 March, a good 21 days later, giving probably enough time for the tycoon to think about his next move and act. But it now turns out that the order never reached Diageo. "We understand that the Debt Recovery Tribunal is in the process of issuing an interim order, which we will review once the full details are available," the Diageo spokesperson has told IANS.
7) On 7 March, Enforcement Directorate also registers money laundering case against Mallya. "Mallya and others will soon be questioned. The agency has collected relevant documents from concerned authorities and the bank in question," ED sources told PTI. The agency may have to put the questioning on hold now, as he has already left the country.
8) On 8 March, probably after banks found that the DRT order was not going to help them, they approached the Supreme Court to block Mallya from leaving the country. The court listed the case to be heard on 9 March.
9) On 8 March, corporate affairs minister Arun Jaitley said in written reply to a Rajya Sabha question that a Serious Frauds Investigation Office investigation into alleged fund diversion by Kingfisher Arilines is underway.
10) On 9 March, AG informs the court that Mallya had left the country already on 2 March. The court issues notice to Mallya to be present with passport in the court on 30 March, the date it will hear the case next.
11) On 9 March, the Maharashtra sales tax department also woke up and filed a plea in the Bombay High Court seeking recovery of dues worth nearly Rs 60 crore from Kingfisher.
12) On 9 March, a Delhi court fixed 24 April for hearing the final arguments in a case against Mallya for allegedly evading summons issued by the Enforcement Directorate in connection with alleged violation of foreign exchange rules.
Clearly, there are gaping holes in the system which need to be filled in at the earliest. It may be coincidental that the developments happen at a time when the Parliament session is on. But it should prompt the politicians, who are now engaged in a blame game over Mallya, should take note and act fast.
How Vijay Mallya gets to lord over his wealth even as bankers chase him
Narayanan Madhavan, Hindustan Times |
Updated: Mar 10, 2016 08:26 IST
Vijay Mallya has been in the dock ever since his ambitious airline venture Kingfisher landed in financial troubles and got eventually grounded in October 2012. (PTI)
When you speak of Vijay Mallya, horses and stud farms may just be the right examples to illustrate his elegant movements.
Perhaps we should be asking banks that wanted him held back in India to recover whatever money they can recover from him arising from loan defaults by Kingfisher Airlines he founded and grounded: Has the horse bolted the stable?
Well, anyone with horse sense will know by now that the beer baron’s financial condition is not quite, er, stable. Unless you count his personal wealth that spans everything from race horses and football clubs to a sword used by Tipu Sultan.
We should not also forget a pair of Mahatma Gandhi’s spectacles he owns. Partly because he is usually seen in designer shades, and not the round, rimless variety worn by the Father of the Nation in his austere way. Austerity is not something you associate with Mallya anyway.
Read Mallya misled govt, employees: Former women staff of Kingfisher Airlines
Attorney General Mukul Rohatgi, representing the consortium of banks to whom the baron owes about Rs 7,000 crore, has informed the Supreme Court that Mallya left India on March 2 – days before headlines screamed the banks wanted him held back.
The man may be in one of the castles he owns in Scotland, or who knows, in his apartment in Manhattan’s swank Trump Towers, where he might just bump into Donald Trump and improve future bilateral relations with the US, just in case the xenophobic Republican gets elected. Something tells us the two will just get along fine.
Read more: Vijay Mallya left country in spite of look-out notice against him by CBI
But hey, how does he manage to lord over all that wealth while the bankers are after him?
Now, the magic lies in the thing called the limited liability company. So, when you borrow from a “limited” company, your personal liability in repaying any money owed by the company you may virtually own is limited. And, as you wonder about the nuances of how banks can claim only the assets you pledge and not what you own in general, please do take a moment to think of economist John Maynard Keynes, who once famously said: “If you owe your bank manager a thousand pounds, you are at his mercy; if you owe him a million pounds, he is at your mercy.”
Mallya’s case is quite different from the Satyam scandal, where founder Ramalinga Raju admitted to doctoring accounts and went to jail. The nuance of the law is different when you default – as distinct from an act of fraud.
So Mallya’s stud farms and ear studs alike can stay intact, and he does not have to auction his Bulgari/Maybach shades, not to speak of Mahatma Gandhi’s spectacles.
Come to think of it, Mallya doesn’t need those Gandhi glasses. You know, he is pretty good at making a spectacle of himself.
Did lenders flout rules while pledging the KFA brand for loans?
Beena Parmar and Ramsurya Mamidenna, Hindustan Times, Mumbai |
Updated: Mar 08, 2016 23:19 IST
A file photo of a Kingfisher Airlines customers waiting at a check-in queue at Mumbai's domestic airport. The move to pledge the Kingfisher Airlines brand with IDBI Bank to raise around Rs 900 crore has raised questions since this is not a common method for lenders to extend loans, as intangible assets do not offer a clear estimate of future cash flows.
The development has also fuelled suspicion that prudential norms were not followed in the pledging of the brand as collateral, prompting the CBI to include this aspect in its probe on whether norms were deliberately overlooked while extending loans to Kingfisher Airlines (KFA).
While IDBI Bank and KFA did not comment on the issue, a senior official with a public sector bank said: “Brand as a security is not regularly accepted by banks for extending loans. While sanctioning working capital loans for a functioning firm, primary security is the only pledge and collateral is only an additional security.”
Primary security is in the form of stocks and book debts, and the security requirement is based on risk perception of the official evaluator.
“There are various parameters that are followed in evaluating a brand, with its potential in determining future cash flows, being the most important,” said Darshana Kadakia, partner, valuations with Grant Thornton.
While it is reported that Grant Thornton did the valuation for Kingfisher Airlines brand, a spokesperson did not comment citing client confidentiality.
It has been reported that IDBI Bank had lent about Rs 900 crore on the Kingfisher Airlines brand, quite high compared to other such cases. Also, in 2012-13 when the loan was extended, the airline had started making losses.
“If one were to consider an example, during the sale of Wockhardt’s protein business to Danone, during the same time period, the total valuation of the deal was pegged at Rs 1,500 crore, of which the brand valuation was Rs 250 crore. Wockhardt was a profit-earning company,” said an auditor who inspected Wockhardt’s books.
Mallya owes around Rs 7,000 crore in dues to a consortium of 17 lenders led by SBI.
According to another auditor, banks take a risk by extending loans on a brand. “In a construction company, you may have a right to collect toll for 30 years. That also is an intangible asset, but at least there is a visible project on hand. Here that is not the case.”
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Mallya misled govt, employees: Former women staff of Kingfisher AirlinesPTI, New Delhi |
Updated: Mar 08, 2016 23:36 IST
In an open letter, the women employees also accused Vijay Mallya of ’killing’ two airlines and rendering hundreds of people jobless.
Questioning his silence over non-payment of salaries to hundreds of employees of the now-defunct Kingfisher Airlines, a group of former women staffers has accused Vijay Mallya of misleading the government and employees over a revival plan.
In an open letter, which comes on the occasion of International Women’s Day, the women employees also accused the beleaguered industrialist of “killing” two airlines and rendering hundreds of people jobless.
“You say that you are not a defaulter. But you confidently told us during the meeting that banks won’t be able to recover more than 5-10% of debt amount. That speaks volumes of your malicious intentions.
“In the same meeting, you promised revival, payment of our salary... This clearly means that you had no intention of reviving the airline while you kept submitting misleading revival plans to banks/DGCA,” the women staffers alleged in the letter.
According to sources, nearly 700 of the 1,500 employees, who still claimed to be on the payroll of the defunct airline, are women.
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