Government Efforts To Deport Vijay Mallya, Probe Overseas Assets A Drama?

As the CBI and Enforce Directorate probe against Vijay Mallya’s alleged money laundering case haven’t yet generated enough evidences, the government of India’s decision to revoke his passport and deport him for trials here has already been proved premature. And, the latest on the case-- the investigating agencies’ probes to find out details about his investments in companies and other assets abroad will be proved another set of wasteful efforts.

The investigating agencies’ current probes are directed at some 40 big and small companies, in which Mallya owns a stake directly or indirectly, in countries including the UK, South Africa, the Netherlands, China and Nepal, to find out whether he used the money that Kingfisher airlines raised through loans from Indian banks to invest in these companies. While this is fine if CBI and ED could prove that Mallya has siphoned off the lenders’ money, the bigger question here is that whether all these efforts will result in the loan recovery or at least to get Mallya into the country for a personal trial on the alleged cases. The answer is--quite unlikely.

It is a common knowledge that Vijay Mallya and his family owned overseas assets and investments even before he floated Kingfisher Airline. He must have also purchased new movable and unmovable assets abroad during the last one decade, perhaps even after the collapse of Kingfisher Airline. But unless it is proved that he used the money that his company raised from the Indian banks for un-intended purposes, there is no possibility of making a case against him.

But for this, the easier solution is just to investigate the amount of money that Kingfisher Airlines has actually used for its capital expenditure, working capital requirements and others from its books during its time of operations and tally them with the then available funds and liabilities. The books of accounts and other records of Kingfisher Airline are available with the auditors, the registrar of companies, SEBI and other competent authorities in India. The CBI and ED could also question the former management and directors of the grounded airline.

It is a known fact that Kingfisher Airline, like any other airlines in India, including the state-owned Air India, made huge losses as the industry is very capital intensive and the operating environment was costly due to record prices of fuel, high fees and service charges imposed by government etc. It was also a fact that Kingfisher Airline was operated with its premium services and thus the cost structure was comparatively higher. So it was reasonably within the limits of a sensible analysis that a company which operates in such an environment can well amass losses and can go bankrupt even.

Kingfisher Airline’s total (actual) loans from Indian banks, including IDBI and SBI, were around Rs 4,000 crore, which was quite a reasonable working capital requirement that a premium civil aviation company can easily consume in a few years of operations.

Billionaire Mallya, who fled to the UK in March after the controversy on loan defaults by his troubled airline became hot in India, had twice made his offer to settle Kingfisher Airlines’ loans to the banks though with a huge haircut. Mallya, going by several of India’s earlier cases of absconding loan defaulters and people with money laundering and other economic offense charges, could have easily avoided even those offers. But he didn’t do that. He also made an effort to communicate to the competent authorities and even media to make his stand clear that he is personally willing to settle the loans that his company defaulted and also to come back to India, unlike many others in the similar situation who just went hiding.

The government should have rather attempted using those offers first to ensure that the bank NPAs are at least partly recovered and Mallya returns home with a little more comfortable terms for further probes. But it lost both the opportunities now or it rather wants to do some drama over the whole issue just to evade the public attention on a bigger crisis of bank NPAs and a rotten banking system.