Vijay Mallya: Reining in the Baron
A flamboyant liquor baron, a crumbling business empire, glitz and glamor, mounting debts, F1 cars, and a swanky refitted Airbus 319 thrown in for good measure. When these are the ingredients that make up the story, one can be sure that a lot of people will certainly be interested in knowing how it all turns out finally.
Vijay Mallya, who was until recently the chair of United Spirits limited has been offered $75 million (about Rs. 515 crore) to step down from his post. The payment will come from global spirits major Diageo, which recently acquired United Spirits. While the deal was ironed out, a consortium of banks, to whom Mallya owns over 7000 crores, have decided to attempt to fast track their claim of dues. In light of this deal, the banks appealed to the Debt Recovery Tribunal at Bangalore, which in turn temporarily restrained Mallya from receiving the Diageo payment. In a further blow to Mallya, the banks have moved the Supreme court with a plea that he should be restrained from leaving India. This move comes in light of Mallya’s statement soon after the Diageo deal was closed, where he indicated that he planned to spend more time in England, with his children.
A statement like this, from an individual who owes over 7000 crore in dues, is more than certain to send the creditors into a tizzy. The Supreme court will hear the plea filed by the consortium of 17 banks tomorrow (March 9th). The banks have initiated proceedings to recover money borrowed by the now defunct Kingfisher Airlines Ltd. – the one bad egg in the Mallya kitty. Huge sums that he borrowed to keep the airline afloat seem to be spreading the rot very quickly, with creditors baying for blood. Employees of the erstwhile airline too were a disgruntled lot, after salaries went unpaid.
Mallya, on the other hand, continues to put up a defiant face, claiming that efforts were on from his end to ensure payments were made to the lenders. He denied ‘personally’ being a borrower or a defaulter and said that he was being targeted despite there being much bigger borrowers and defaulters in the country. He said he will continue to co-operate with all investigations in this regard.
The Mallya empire has been crumbling for a while now, with several crisis ridden companies being shut or sold. The UB group has come under severe financial stress, thanks in large measure to the luxury airline venture. With such huge debts hanging over him, it is no surprise that the news of a pending payment of over 500 crore from Diageo triggered outrage among his creditors. How could he continue to roll in money while the dues were piling up on the other side, was the question.
There have also been several glaring inconsistencies in the legal proceedings, if one were to look at it closely. Despite being classified a ‘willful defaulter’ by several banks, and the various cases dragging on for over 5 years, the system seems to be in no hurry to enforce justice. While the banks have once again moved court for all manner of measures – from confiscating the Diageo money to impounding his passport, the DRT (which is meant to be a fast track court for large defaulters) has simply sought to postpone the hearing of the case to March 28th! This, despite all the necessary evidence being in place. Even the restriction in accessing the Diageo money seems to be only temporary. Also, why did the banks wait for so long when it was clear that the Rajya Sabha MP led airline was in troubled waters since late 2010?
Mallya continues to claim that the media are indulging in sensationalism, and that the disinformation campaign is aimed at smearing his reputation. He has also legally challenged several of the claims raised against him. He also expressed a desire to not be held hostage to TRP ratings by media houses, hoping that sense and truth would prevail.
Legal tussles notwithstanding, it is evident that this is one issue (among several others) that the general public will never be able to get to the bottom of. The sheer voloume of legalese involved, and the ponderous nature of the Indian legal systems will ensure that everybody will get tied up in reams and reams of red tape in the days to come. And to think that a shrewd businessman like Mallya would not be backed by the best legal minds in the world that money can buy, would be naivety of the highest order. Is Mallya indeed the villan that he accused of being? Or is he another victim of a centuries old system and headline hungry media moguls? One might never find out. The story however, makes for compelling reading.
How the mighty have fallen: Vijay Mallya and the crumbling of an empire
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