MALLYA FIGHTS EXTRADITION IN LONDON COURT
Detailing charges against businessman Vijay Mallya on Monday to obtain his extradition to India on behalf of the government, Britain’s Crown Prosecution Service (CPS) accused him of multiple economic offences, including fraud and unlawful utilisation of bank loans.
On the opening day of a scheduled eight days of hearings over two weeks, the Indian government argued before a British court that there was a “prima facie” case against the chairman of the now defunct Kingfisher Airlines (KFA), deserving further investigation, which demanded his return to India for answers. The plea was not that he has been found to be guilty of any wrongdoing yet.
The CPS, representing the Central Bureau of Investigation and the Enforcement Department of the Union finance ministry, stated he had a “case of fraud to answer”. However, it set out a “revised position” as compared to its previous “position statement”. It alleged the case was about his “conduct”, that there was a “conspiracy” and that “funds were misused”.
Appearing for the Indian government, Mark Summers emphasised to the chief magistrate of the court, Emma Arbuthnot, that the IDBI Bank “bankers are not relevant” and that these “banking officials are not going to be the focus”. This was surprising because Indian investigators had hitherto claimed there was collusion between senior executives of the bank and Mallya to obtain facilities for KFA — the crux of the issue — in 2009.
Summers cited several witness statements, notably one by Subroto Gupta of IDBI Bank. To these, Clare Montgomery, counsel for Mallya, pointed out a number of times they were “not involved in the process” of granting loan to KFA.
Summers outlined KFA applied for a loan of ~950 crore to IDBI Bank as part of a ~2,000-crore facility it was seeking from a consortium of banks, including State Bank of India, which in an appraisal of the loss-making airline had approved a lending of ~500 crore as its share of the advance.
Meanwhile, KFA obtained an urgent short-term assistance from IDBI, which was repayable within six months and was settled, albeit a little late.
Thereafter, UCO Bank lent ~200 crore to KFA, thus reducing the amount needed to be given by IDBI to ~750 crore. This was granted in various tranches in December 2009.
Upon KFA defaulting on the interest payments in 2010 before the capital repayments were supposed to begin in 2011, the consortium in due course recalled the entire loan involving the public sector banks.
The case made out in respect of the money taken from IDBI was the loan was secured with false or useless securities, the money was utilised for unauthorised purposes and when the loan was recalled, KFA did not comply.
Summers pleaded: “A court could conclude the defendant never intended to repay. His company was in intensive care.” He said he palmed of KFA’s liabilities to banks.
Among the accusations made against Mallya was his UK-based Force India Formula One racing company over charged Kingfisher for advertising on its cars, hinting he had thereby laundered money. But, there was no specific charge of money laundering or colluding with bank officials.
The day began in a dramatic fashion, with the courthouse having to be vacated because of a security alarm before the hearing began. This delayed the commencement by over an hour and forced Mallya out of the building and a media den on the pavement.
A source close to Mallya dismissed the Indian government’s assertions in court as “factually untrue”.