Vijay Mallya offers to repay 100% of bank loans: all you need to know

By Elton Gomes

Fugitive liquor baron, and wanted economic offender in India, Vijay Mallya, on Twitter, said that he is offering to pay back the full amount of the principal loan he owes multiple banks.

Mallya, who is currently being investigated for money-laundering and fraud posted a couple of tweets, after AugustaWestland middleman’s Christian Michel’s extradition. He added that Kingfisher beer and airlines added thousands of crore to state exchequers.

In a series of tweets, the liquor baron said that the huge loans he took from banks went into keeping his now-defunct Kingfisher Airlines afloat despite high jet fuel prices.

A person familiar with the case in India said that although Mallya has offered “the principal amount (and not the interest) and expressed a willingness to return to India. With the threat of confiscation of properties writ large, the law will take its own course and investigation agencies will have to wait and see what the UK court decides,” Live Mint reported.

Mallya writes letter to PM to settle dues

The recent development is not the first time Mallya has made such a promise. In June, Mallya released a two-year-old letter to Prime Minister Narendra Modi and said that he was “making every effort” to settle his dues to banks. Mallya said that he had been made the “Poster Boy” of bank default and a lightning rod for public anger.

“I wrote letters to both the Prime Minister and the Finance Minister on 15th April 2016 and am making these letters public to put things in the right perspective. No response was received from either of them,” Mallya said, justifying his first statement after a “long period of silence”, NDTV reported.

“I have been accused by politicians and the media alike of having stolen and run away with Rs. 9,000 crores that was loaned to Kingfisher Airlines. Some of the lending Banks have also labelled me a wilful defaulter”, Mallya said further.

According to him, the CBI and Enforcement Directorate were “determined” to frame criminal charges against him.

“The surprising fact is that the ED has objected in court to my Group’s applications for sale of assets in order to allow me to repay creditors, including Public Sector banks,” he said, commenting that it raised the “fundamental question of whether the Government wants me to repay the Public Sector Banks or not”, Mallya said in his letter to the Prime Minister, as per the NDTV report.

Mallya says he met Jaitley before leaving India

In September, Mallya claimed that he had a “meeting” with the Union Finance Minister Arun Jaitley before leaving India. Minutes later, the fugitive liquor baron backtracked and blamed the media for distorting facts and essentially confirming the minister’s version of events.

In London, for the hearing of his extradition case, Mallya said he met Jaitley before leaving India.

“I left because I had a scheduled meeting in Geneva, I met the finance minister before I left, repeated my offer to settle with the banks… that’s the truth,” he told reporters outside London’s Westminster Magistrates’ Court. Mallya said that he had also told Jaitley that he was leaving for London.

Responding to the claim, Finance Minister Jaitley wrote in a Facebook post: “Since 2014, I have never given him any appointment to meet me and the question of his having met me does not arise. However, since he was a Member of Rajya Sabha and he occasionally attended the House, he misused that privilege on one occasion while I was walking out of the House to go to my room. He paced up to catch up with me and while walking, uttered a sentence that ‘I am making an offer of settlement’.”

Jaitley wrote that since he was aware of Mallya’s past “bluff offers”, he did not allow him to proceed further and told him that “there was no point talking to me and he must make offers to his bankers.” The Finance Minister further said that he “did not even receive the papers that he was holding in his hand”.

Special court rejects Mallya’s appeal

A special court, in October, rejected Mallya’s plea seeking a stay on the proceedings initiated by the Enforcement Directorate (ED) to declare him as a fugitive economic offender (FEO).

Special judge M.S. Azmi rejected Mallya’s plea and said that the court will hear arguments on the main ED plea to declare the liquor baron an FEO on November 22.

The special court had heard extensive arguments from Mallya’s lawyer as well as the ED counsel on his petition to seek a stay on proceedings of the agency’s probe against him.

The ED has sought that Mallya, who is currently in the UK, be declared an FEO. The agency also sought to confiscate his properties and that they should be brought under the control of the Union government as per provisions of the new FEO Act.

What is the Vijay Mallya default case?

Mallya started Kingfisher Airlines in 2003. However, the airline’s performance dipped gradually. A number of loans were taken to revive the air carrier, which took a nosedive into losses. For the first time on November 4, 2009, Kingfisher reported a second quarter net loss of Rs 418.77 crore, and reportedly laid off nearly 100 pilots.

In August 2014, the State Bank of India (SBI) claimed that, in several instances, funds were diverted from Kingfisher Airlines to various companies within Mallya’s United Breweries (UB) group. The SBI alleged that the UB group had been “deliberately avoiding payment to lenders”.

A consortium of Indian banks, including the SBI, named Vijay Mallya, Kingfisher Airlines, and the UB group as wilful defaulters.

In October 2015, Mallya’s offices were searched by the CBI, and the investigative body questioned him in December. Mallya, however, fled to England in March 2016, to evade trial. Since then, the Indian government and the banking community have been demanding his extradition.

In June 2017, the ED filed a chargesheet under the Prevention of Money Laundering Act (PMLA) alleging that Mallya fled to the UK when a consortium of 13 banks, led by the SBI, closed in on him, with Mallya owing the banks Rs 9,000 crore.

Elton Gomes is a staff writer at Qrius