Vijay Mallya, the Indian businessmen involved in the case of defunct Kingfisher Airlines (KFA), can be extradited from the UK to face fraud and money laundering allegations in India, the Westminster magistrates' court has ruled.
According to Judge Arbuthnot, there was no reason to block the extradition after finding that Mr. Mallya had a prima facie case to answer on criminal charges linked to the collapse of Kingfisher Airlines in 2012. This decision is hailed as a victory by India’s Modi government after their two-year attempt to secure the extradition of the “king of good times” as part of their declared war on the “crony capitalism” of its predecessors.
Arun Jaitley, India’s finance minister, on Monday, tweeted- “Great Day for India. No one who cheats India will go scot-free.”
The 62-year-old, businessman who has built India’s biggest alcoholic drinks business, claims he is the victim of a high-profile “witch-hunt” and a politically charged movement led by Narendra Modi, India’s prime minister. However, Judge Arbuthnot said-
"There was a failure to ensure that the guarantees were formally taken when they should have been and a failure to investigate the representations that KFA made at various stages to obtain the loans.”
Home Office receives Mallya’s verdict
The UK Home Office said it has received the Westminster Magistrates' Court verdict for Mallya's extradition to India.
“If after considering the case the Home Secretary thinks extradition should go ahead, he has to order the extradition within two months of the date the matter was referred to him. Whatever that decision, the losing side has up to 14 days within which to approach the appeal – if granted – will be heard at the High Court,” said the Press Officer at CPS.
Mr. Mallya is a flamboyant celebrity businessman in India, where he is considered symbolic of Indian businessmen who lead luxurious lifestyles even as their companies fail to repay billions of dollars in debts to the stricken banking system. The allegations against Mr. Mallya vary from the diversion of funds from bank loans, including from state-owned IDBI Bank.
Kingfisher Airlines, where Mr. Mallya was chairman and chief executive, became defunct in 2012 leaving about $1.1bn in unpaid debts to banks that were mostly state-owned. Mr. Mallya has repeatedly insisted that the airline’s demise was a legitimate business failure triggered by unfavourable Indian aviation industry policies and unprecedented high oil prices, almost $112 per barrel at the time. The Indian government alleges that Mr. Mallya’s handling of his airline went beyond bad management into criminal wrongdoing including fraud, fund diversion, and other misdeeds. It claims that Mr. Mallya was the central figure in a “dishonest plot” to obtain large loans from IDBI for Kingfisher Airlines in 2009.
Willing to repay 100% borrowing
Earlier before the judgment Mr. Mallya had tweeted saying he was willing to repay 100% of the principal amount that he had borrowed from all creditors, including the consortium of banks led by the SBI, and paying the salary of his ex-employees. Mr. Mallya went on to even say how it was not a bogus offer.
Is it not the duty of the banks to consider the various “substantive” offers and accept them? To that, Rajnish Kumar the chairman of SBI in an interview to Mint said that the bank has not received any formal offer from Mallya for settlement of loans “as of date”.
However, even if the banks and Mr. Mallya reach some sort of a negotiation wherein the banks are able to recover their money, Mr. Mallya faces criminal charges of siphoning off money under Prevention of Money Laundering Act (PMLA) that is being investigated by the CBI.
The defense at Magistrates Court had argued that the CBI is a “caged parrot” and follows it's minister's words. But the Court observed that CBI special director Rakesh Asthana had not acted "corruptly".
“It sets things in motion, he has got charges like siphoning & diverting funds. It is not just a case of repayment of money it also involves a lot of criminal deeds. He should face the music,” said Neetu Sukla, former Kingfisher employee on UK court ordering Vijay Mallya’s extradition.
In her ruling, Judge Arbuthnot said the allegations were that Mr Mallya and other Kingfisher executives conspired with figures at IDBI Bank to sanction and disburse loans they had no intention of repaying. Addressing IDBI's failures she that there had been a “catalogue of failures of the bank at different levels” and that if proper background checks had been carried out then the loans to Kingfisher would not have been granted. These failures, she said in the ruling, were either deliberate or “it is a case of a bank who was in the thrall of this glamorous...billionaire playboy who charmed and cajoled these bankers into losing their common sense and persuading them to put their own rules and regulations to one side”.
Mallya’s right to appeal to higher court
Despite Monday’s decision, Mr. Mallya is unlikely to be extradited from London for some time and may seek to overturn the decision to the High Court. After coming out from Monday’s hearing, in his address to the media, he said-
“She [Judge] told me about my right to appeal. It's unfortunate that the Judge has found a prima facie case that I had misrepresentations to the IDBI bank only and persuaded them to loan money to Kingfisher airlines.
“Be that as it may, the judge was entitled to make whatever judgment she thought fit. I have my rights. You heard the judge. My legal team will consider various options and then I will decide going forward."
His lawyers had argued that his extradition to India should be blocked as “no credible evidence” was put forward and said that Kingfisher had given “full, complete and accurate information” to IDBI before the loans were made. For the judge to make her decision, it was not necessary to establish whether he was innocent or guilty of the allegations, but whether there was enough prima facie evidence of a criminal case for him to be extradited.
Mr. Mallya has the right to appeal to the higher court against Monday's judgment within the next 14 days. However, it is unlikely that the judgment pronounced can be over-turned. If his appeal is granted permission by the court then an extension period of another month or two can be provided to him. However, if Mr. Mallya doesn't go through with the appeal and Sajid Javid who is the Home Secretary signs off on the extradition judgment then he is setting himself up for a long investigation process and a perhaps a longer stay at 12 Arthur Jail.
Many economists in India also believe that with Mallya’s extradition, the process to extradite Nirav Modi and Mehul Chowksi, wanted in the biggest-ever banking fraud of roughly $2bn at state-run Punjab National Bank, may also be expedited.
