Mallya has lived on the edge for long enough to know that his extradition from the UK is not a given, says N Sundaresha Subramanian.
Illustration: Dominic Xavier/Rediff.com
His recent arrest in London is not the first time Vijay Mallya has found himself in custody.
Thirty-two years ago, the so-called ‘King of Good Times’ was picked up for allegedly violating the draconian Foreign Exchange Regulation Act. On June 5, 1985, he was picked up at the Bangalore airport (now Bengaluru), while returning from Calcutta (now Kolkata).
Unlike April 18, when he was granted bail in three hours after being picked up by Scotland Yard in London, the then 30-year-old Mallya had to spend the entire night at the police commissioner’s office on Infantry Road.
Barring a lone exception, the city press missed the story or chose not to report it, writes K Giriprakash, a Bengaluru-based business journalist in his 2014 book, The Vijay Mallya Story. By the time the papers were out the next morning, Mallya ‘had already been released with surety from one of his managers,’ Giriprakash writes.
The arrest drew national media interest in Mallya and eventually led to the Shaw Wallace takeover story, which would play out over the next two decades.
The non-resident Indian status, which he uses efficiently in more ways than one, could be traced back to that deal.
Over these years, he would mount several other acquisition moves, some friendly, some not so friendly.
Many of these were funded by the abundant cash generated by the prized acquisitions of his late father, Vittal Mallya, including United Breweries, which he had bought from its British owners.
But, the flashy Kingfisher Airlines, and its doomed acquisition of low-cost carrier Air Deccan, would prove one too many even for such a cash cow.
Mallya, who modelled himself on Virgin group’s Richard Branson, borrowed heavily to keep the venture going, and pulled various levers to get the public sector banks play along.
At one stage in 2012, he was on the verge of getting arrested again when Kingfisher Airlines failed to pay dues to the Hyderabad airport and its cheque bounced. But, he managed to avoid that.
What he could not avoid was the lenders’ actions, especially in the last couple of years.
He has lost control and even board presence in many of the companies he had lorded over.
His troubles started when banks started declaring him a willful defaulter and began refusing credit to the companies that had him on board.
United Spirits is under a new ownership.
It was his famous resignation letter from the board of this company, the juicy severance package and his subsequent departure to London that triggered allegations of banks letting him go off easily.
The banks moved the Supreme Court with new-found vigour and argued passionately, which has then rubbed off on various central agencies pursuing various cases, including the extradition.
Several agencies including the Securities and Exchange Board of India are probing the deal in which control was transferred to Diageo.
UB Engineering has moved for insolvency, while Mallya had to step down from the board of Mangalore Chemicals & Fertilisers and yield control to Saroj Poddar of Zuari, reportedly under pressure from the consortium of lenders led by the State Bank of India.
Mallya and his investment firms still hold about 30 per cent in United Breweries.
About a half of this holding is pledged, according to exchange data.
The development on April 18 in London followed reports of a new owner taking possession of his famous Kingfisher Villa in Goa, where he used to throw lavish parties. The banks sold it recently for ₹73 crore.
Also, on April 17, Sahara India chairman Subrata Roy, who used to match Mallya party for party and partnered him in a Formula One venture Sahara Force 1, faced a court move to sell off his crown jewel, Aamby Valley City.
Like Roy, Mallya, now 61, has walked the tight rope on the fringes of economic legislation and dabbled in the double-edged swords of proximity with politicians and media attention for enough years now.
No wonder, then, that he tweeted after the news broke of UK judge granting him bail, ‘Usual Indian media hype. Extradition hearing in court started today as expected.’
Reportedly, he had denied any wrongdoing before the court.
What could come in the way of Mallya convincing the UK judges about what he sometimes describes a ‘political witch hunt’ is a Central Bureau of Investigation chargesheet in the IDBI Bank loan sanction issue.
In January, the central agency arrested Yogesh Agarwal, former chairman and managing director of the bank.
This formed the basis of further efforts mounted by Finance Minister Arun Jaitley, through official and diplomatic channels, to initiate the extradition process.
Ramesh Vaidyanathan, managing partner, Advaya Legal, said, “The good part is that a prima facie case has been made out in the extradition request made by the Government of India earlier this year and a district judge in the UK has found merit in this request. This was possible largely due to the emphasis in the request on the cheating and money laundering aspect of the CBI chargesheet in the IDBI Bank loan sanction issue. A pure civil wrong of loan default of the borrower or the guarantor would not have entitled an extradition request to the UK authorities.”
Experts point out that Mallya would have the ability to access due process under the UK law, which will include a full hearing before the district court, hearing before the secretary of state, a high court and the Supreme Court.
“Mallya’s arrest is definitely one step forward, but one among many to be traversed before getting anywhere close to his extradition,” Vaidyanathan said.
