FI­NALLY

In its re­port in which the CAG has held the Min­istry of Civil Aviation re­spon­si­ble for the fi­nan­cial loss, the govern­ment au­di­tor has fi­nally man­aged to bell the cat!

SP's Airbuz - - Table Of Contents - — B.K. PANDEY

AREPORT IN THE IN­DIAN me­dia in the re­cent past in­di­cated that the Comptroller and Au­di­tor Gen­eral of In­dia (CAG), has pulled up the Min­istry of Civil Aviation for fail­ure on its part to adopt ap­pro­pri­ate measures to re­cover dues of 9.19 crore from King­fisher Air­lines when it was still op­er­at­ing. The fig­ure of 9.19 is in­deed pal­try when viewed in the con­text of the sum the former Chair­man of King­fisher Air­lines owes to the con­sor­tium of In­dian banks which is $1.4 bil­lion or in the re­gion of 9,000 crore. This is nearly a thou­sand times the amount the de­funct King­fisher Air­lines set up by the now fugi­tive busi­ness ty­coon Vi­jay Mallya owes to In­dian banks and the govern­ment. And with the pas­sage of time, the dues will only grow on ac­count of in­ter­est that will con­tinue to ac­cu­mu­late on the orig­i­nal amount owed to the two agen­cies. In fact the sum owed to the Min­istry of Civil Aviation (MoCA) has grown to 17.44 crore as of end March 2016.

Vi­jay Mallya, son of Vit­tal Mallya took over as Chair­man of United Brew­eries Group in 1983 af­ter the demise of his fa­ther. Since then, the Group has grown into a multi­na­tional con­glom­er­ate of over 60 com­pa­nies. In 2005, when there was a boom in the In­dian civil aviation in­dus­try, Vi­jay Mallya launched the glam­orous King­fisher Air­lines, named af­ter the ma­jor al­co­holic drink pro­duced by the com­pany. Un­for­tu­nately, ow­ing fun­da­men­tally to flawed fi­nan­cial man­age­ment and some­what un­war­ranted ex­trav­a­gance, this new busi­ness ven­ture col­lapsed and the Air­line had to be closed down in Septem­ber 2012 leav­ing a huge fi­nan­cial li­a­bil­ity on the com­pany and on Vi­jay Mallya per­son­ally. As a re­sult of this mess, Vi­jay Mallya has landed up on the wrong side of the law. He has been ac­cused of be­ing a “wil­ful de­faulter” un­der the In­dian le­gal sys­tem and is fac­ing charges of money laun­der­ing and mis­ap­pro­pri­a­tion.

De­spite be­ing armed with a huge le­gal ma­chin­ery, the govern­ment ap­pears to be at a loss as to what would be an ef­fec­tive road map for re­cov­er­ing the hu­mon­gous sums owed by Vi­jay Mallya to the banks in In­dia. In the case of sum owed by King­fisher Air­lines to MoCA, even if the amount in­volved is rel­a­tively much less, there has been com­plete lax­ity in con­trol and man­age­ment of the sys­tem of col­lect­ing dues from pri­vate op­er­a­tors. This case in point per­tains to three agen­cies that were in­volved in this ex­er­cise namely King­fisher Air­lines who was the op­er­a­tor of air ser­vices, the Ban­ga­lore In­ter­na­tional Airport Lim­ited (BIAL), the com­pany re­spon­si­ble for run­ning the In­ter­na­tional Airport at De­van­halli, Ben­galuru, now re­named as Kem­pe­gowda In­ter­na­tional Airport (KIA) and MoCA rep­re­sent­ing the govern­ment.

It was the re­spon­si­bil­ity of King­fisher Air­lines to col­lect Pas­sen­ger Ser­vice Fee (PSF) as part of the ticket sold to the pas­sen­ger. There­after, it was the re­spon­si­bil­ity of BIAL to col­lect the PSF pe­ri­od­i­cally from the King­fisher Air­lines and de­posit it with the con­cerned de­part­ment of MoCA. Ow­ing to the to­tal fi­nan­cial mess, King­fisher Air­lines had landed in, it had dis­con­tin­ued trans­fer­ring PSF to BIAL. The lat­ter in turn failed to take any steps to en­sure that King­fisher Air­lines ful­filled its obli­ga­tion. The net re­sult was that the fi­nan­cial li­a­bil­ity on King­fisher Air­lines con­tin­ued to mount and BIAL failed to take ap­pro­pri­ate measures to re­cover dues from the air­line, pos­si­bly on ac­count of the high pro­file of its owner. As a re­sult, the MoCA was the loser. In­stead of tak­ing steps to re­cover the dues from King­fisher Air­lines, in March 2014, BIAL ap­proached the MoCA with a pro­posal to write off the dues re­cov­er­able from the air­line. MoCA was ob­vi­ously in no po­si­tion to ac­cede to this re­quest as it would be an un­due favour to the de­faulter and con­don­ing of fail­ure of BIAL to ful­fil their fi­nan­cial re­spon­si­bil­ity. What is even more strange is the fact that MoCA was fully aware of the fact that King­fisher Air­lines was in de­fault of timely re­mit­tance of PSF, but did not di­rect the airport op­er­at­ing agency to col­lect or re­mit the dues or ini­ti­ate any other ac­tion in the mat­ter.

In its lat­est re­port on the sub­ject in which the CAG has held MoCA re­spon­si­ble for the fi­nan­cial loss, the govern­ment au­di­tor has fi­nally man­aged to bell the cat!

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