Vijay Mallya never “intended to repay” loans from a government-owned Indian bank, lawyers representing the Indian government told a London court on Monday. The businessman faces allegations of financial misconduct relating to the 2012 collapse of his former company Kingfisher Airlines. Monday was the first day of what is expected to be a two-week extradition hearing at Westminster magistrates' court in London. It is not a trial determining Mallya's innocence or guilt. Chief Magistrate Emma Arbuthnot will instead, decide whether evidence submitted is enough to extradite him.
Representing the Indian government, the Crown Prosecution Service asserted that the embattled liquor baron had a “case of fraud” to answer. It laid out what it termed as “three chapters of dishonesty” by the former Kingfisher Airlines BSE boss being misrepresentations to various banks to acquire loans, then how he misused the money and finally his conduct after the banks recalled the loans. CPS barrister Mark Summers said, “Instead of acting as an honest person and doing what he could to meet his obligations, he sets about erecting lines of defence.” He said the Indian government said there are reasons why a court can conclude that the bank loans at the centre of the fraud case were ones the “defendant (Mallya) never intended to repay”.
He said, “His company was in intensive care and it was going to sustain huge losses. The defendant had a choice: either take those losses yourself and impinge on your lifestyle, or try to palm them off on to your bank.” Mallya meanwhile, denies any wrongdoing, claiming he is the victim of a high-profile “witch hunt” conducted by the Indian government. Kingfisher's creditors struggled to recover money from the tycoon after the company collapsed. He is represented by Clare Montgomery QC, who had also successfully represented the Swedish government in their extradition request against WikiLeaks founder Julian Assange.
The prosecution blamed Mallya of stashing the borrowed money in different banks, including “some chunks in HSBC London”. He accused the 'King of Good Times' of making huge withdrawals in Goa, spending part of the money in motor racing and said that he “spent the money to pay rent for two corporate jets which he used exclusively for personal use.”
Montgomery responded to Summers' statements by claiming that the State Bank of India, which led the consortium of banks that extended the loan, had credibly appraised the loan and acknowledged that Mallya's company had been “frank” in reporting its financials at that time. “Calling him dishonest is a seriously advanced charge.” Had he not been hounded by banks and authorities, “by now, Mr Mallya could have paid back 80 per cent of the loans,” she said. Montgomery said Kingfisher Airlines ran into trouble due to the global economic slowdown in 2009. She said the Indian government's allegations against her client “had been made without understanding the nature of business and the circumstances during the economic slowdown.” She also alleged that the slowdown had affected other airlines too, but they received help from the government.
The defence claimed that the evidence presented by the CPS to prove a case of fraud amounted to “zero”, which, was a “critical failing on the part of the government of India.” She said the government lacked a credible case to support the argument that borrowing by Mallya was fraudulent and he had no intentions to pay back the loans he sought because his project projections for loss-making Kingfisher Airlines were unreliable. “The reality is that the profitability of an airline depends on economic factors, which are largely cyclical and largely out of the control of the airline itself.”
Judge Arbuthnot is expected to make a decision on Mallya's case before the end of the year. It however, will take years for the Indian government to get him extradited as the UK's protracted legal process allows several appeal options. Also, Home Secretary Amber Rudd would need to sign off on his extradition.
