Early this week, Dutch beer company Heineken bought around 39.64 million shares for around ₹5,833 crore in United Breweries in which former liquor baron Vijay Mallya owns more than 15 per cent stake.
The lenders to Mallya have so far recovered about ₹7,200 crore selling his shares. But the lenders want more even though Mallya has in various affidavits claimed that he owes no more than ₹6,000 crore to the banks. The 14-bank consortium claims that the actual amount Mallya owes as of August last year is around ₹11,200 crore and to other creditors ₹6,000 crore.
This will take some time to figure out how much Mallya actually owes and whether he will be able to settle the rest of the claims at all.
But the bigger issue is will Mallya be allowed to go scot-free if his properties and shares in his various companies fetch the lenders all that is due to them.
Mallya barely managed to escape being declared bankrupt in a London court a few weeks ago. The noose is tightening around him as court judgments have gone against him.
But that doesn’t mean anything for the UK government which claims that until a confidential “legal issue” concerning him is resolved, he cannot be extradited to India.
The UK government, known for doling out asylums to political leaders and fugitives, has refused to disclose what these “legal issues” are and whether he will be extradited at all.
In case Mallya does get extradited in some years, it is certain he will have to face court cases, multiple jail terms, if convicted because squaring off with the lenders and other creditors, is just one part of the deal.
Mallya has been accused, among several other charges, of round-tripping, cheating, criminal conspiracy, money laundering and diversion of loan to other entities. These are serious charges and carry several years of prison terms. His now-defunct airline, Kingfisher Airlines faces charges of violating The Companies Act, 2013. Under the Prevention of Money Laundering Act (PMLA), the Enforcement Directorate has charged the former businessman under Sections 3 and 4. This is related to, according to reports, “diversion” of around ₹3,500 crore of the loans that the airline had received.
The charges include:
* Diversion of ₹2.8 crore to ICICI Bank as repayment of an earlier loan to Kingfisher Airlines.
* Diversion of ₹45.42 crore for “making a payment towards the rental lease” of a corporate jet used by Mallya.
* Diversion of around ₹3,400 crore through “over-invoicing” of lease rentals of aircraft between April 2008 and March 2012.
* Diversion of around ₹50 crore from Kingfisher Airlines to Force India Formula One team of Mallya.
* Diversion of around ₹16 crore from Kingfisher Airlines to Mallya’s company which owned Royal Challengers, one of the teams of the Indian Premier League. (Source: Reports).
The Enforcement Directorate has accused United Breweries Holdings Ltd of assisting Mallya in money laundering while the CBI has alleged that the former liquor baron did not disclose his assets while executing a personal guarantee with lenders when the loans of the airline were restructured in December 2010. This was a one-off largesse offered to Mallya which was much more than a lifeline but this too went down the drain.
The CBI has also charged Mallya with “misrepresentation and giving false information” to the lenders. There are other charges too which Mallya will have to fight and will need a battery of lawyers and money for that and patience.
But a court in London has ruled against Mallya’s appeal to release court-held funds to cover his legal costs in India. A High Court in London recently held that Mallya had failed to provide sufficient evidence in support of the ₹7.7 crore he had sought. This closes another option for the 65-year-old former business magnate to fight his cases in the Indian courts.
To say that Mallya faces a bleak future is stating the obvious, but as long as he stays back in London under the protection of the UK government, he can rest easy.