"You can keep dreaming about a billion pounds; you cannot prove anything without facts." Outside the Westminster Magistrates' Court in the UK, the words from the former Kingfisher chief to reporters delivered shortly after his extradition case hearing on Tuesday, appeared more like a statement directed at the Government of India, not the crowd of mediapersons gathered.
Vijay Mallya was referring to the Rs 9,000 crore bank loans he owes to a clutch of Indian banks — money that was borrowed against the assets and brands of the now-defunct Kingfisher Airlines and on his personal guarantee. The airline became a Non-Performing Asset (NPA) to banks in 2012 when it collapsed and shut down operations, leaving hundreds of Kingfisher employees in a spot. The airline still owes crores of rupees to many of the pilots and members of cabin crew.
Mallya’s utterance, in a confident and defiant tone — somewhat at odds with his stressed-out and exhausted expression after more than a year of 'forced exile' — is no mere rant. It is a cardinal error to assume it is. Beneath the words that emit scorn and disregard to the charges of financial fraud and loan default levelled against him by the CBI and Enforcement Directorate, lies the hard fact that India has so far failed to produce solid evidence to push its case for Mallya's extradition.
It's not just Mallya; even the London court that heard the case took note of India’s failure so far to produce strong evidence. "Are Indians normally very prompt in their responses? They have taken six months so far and we haven't got any further forward in the past six weeks," said Chief Magistrate Emma Arbuthnot. The judge was further quoted by The Times of India as saying, "If there is still no sign of the evidence, then April 2018 is a possibility (for the full hearing). If we have everything, then it may look like December."
Why have investigating agencies not produced the requisite evidence as even after being granted six whole months to do so in a case that has been on the boil for a few years back in India? The only possible theory here is that the Indian investigators, including the CBI, might not have strong evidence that proves an element of criminality in Mallya’s case. This possibility was covered in an an earlier Firstpost article that was published back in April last year, shortly after Mallya left for the UK.
Before revoking his passport and moving an extradition request to the UK, India should have done its homework and put together a foolproof case, also considering that UK laws are far more stringent when it comes to extradition. The Mallya-Kingfisher case has grown far beyond a typical banker-borrower loan default case and has become something of a diplomatic issue between the two countries, and a prestige issue for Indian investigators.
Beyond waging a legal war on Indian investigators and the banks on the 'billion pounds' he owes, Mallya is also fighting a psychological battle with the Indian government, in which the billionaire has a clear upper-hand so far. Mallya’s stance has remained unchanged ever since he left for UK.
"By taking my passport and arresting me, they aren’t getting any money," Mallya said in one of his media interviews around a year ago and that’s what he means even now by his "keep dreaming about a billion pounds" remark. No amount of so-called 'media witch-hunts' and public booing will defeat him in this psychological battle; only hard evidence can do that.
The only chance for India is if it works overnight and furnishes all the evidence to nail the elusive industrialist at the earliest, so that it can make a strong case in the December hearing — until which point Mallya is out on bail — or let the whole episode be extended to another year. The sad part is that even if India wins the legal war with Mallya, say after another year, banks are unlikely to make any significant recovery from the Kingfisher account. The value of money at stake is growing every passing day with accumulated interest amount on the principal. Even if, say, India wins the extradition case in the December hearing, it will take at least a few months to a year to complete the proceedings.
By then, Kingfisher’s remaining assets and collateral in the custody of banks won’t have any value left that's worth the struggle. Remember, banks have so far not managed to sell even Kingfisher House — a prime real estate property right in the middle of Mumbai — and has settled for a much lower value while auctioning the Goa Kingfisher Villa compared to the market price. The notion of banks making any recovery by auctioning the brand and trademarks of Kingfisher Airline is almost laughable. Only an entrepreneur in self-destruction mode would want to go for a brand that has been in the media for all the wrong reasons.
According to this Economic Times report that cites a State Bank of India internal report, the bank now expects to take a hit of around Rs 900 crore on this account.
Kingfisher is a lost a battle for banks already. At a closer look, the blame primarily falls on the lenders themselves for aggressively taking exposure to an airline that did not make a profit in the eight years of its existence. Worse, the lenders did so without even ensuring there were adequate recoverable bits of collateral in case of a loan default. In fact, there were no guarantees beyond the word of one flamboyant liquor tycoon.