Let’s get something right about Vijay Mallya
Lets get something right about Vijay Mallya. The popular narrative is that he milked the banks for Rs.9000 crores to support his hedonistic lifestyle in India and abroad, and took off when the debt burden became excessive or no more money was forthcoming to evergreen his debts. But we seem to forget that he enjoyed a hedonistic lifestyle much before Kingfisher Airlines and he had much money to spread around even before Kingfisher Airlines.
He lavished money on the Janata Dal’s of Ramakrishna Hegde and Deve Gowda, the BJP of Atal Behari Vajpayee and LK Advani much before Kingfisher. The BJP itself that is the party and its MLA’s, took over Rs.100 crores from him for his two Rajya Sabha elections, and the Deve Gowda rump of the Janata Dal probably more. The Congress never allotted him votes, surplus or otherwise, but it does not mean that the Congress and other parties did not benefit from Mallya. And then let’s not forget MJ Akbar.
The Rs. 9000 crore he is now found owing to the PSU banks and others is the money he lost on Kingfisher Airlines. I understand the loan money is about Rs. 4000 crore and the rest is interest and the interest on interest. The banks just kept lending him money to evergreen its loans. This was not possible without political and bureaucratic support. Even if one little Joint Secretary or one little MP or one little bank manager red flagged the growing stain of red on Kingfisher Airlines debts, the bleeding would have been staunched. Mallya just did not milk the banks to keep Kingfisher Airlines afloat; he also milked his own companies such as United Breweries and United Spirits to support its flight into the deep red.
When a business makes a loss, it doesn’t mean the money was stolen. It just means that it has spent more money than it has earned. This means employees got paid for all the years, except the last year, most of the time when the airline did not fly, the oil companies got paid for aviation turbine fuel supplied, the leasing companies got paid for the planes hired, the caterers got paid for the meals supplied on board, the airports got paid their landing and parking fees, and the taxes and cesses due for the most part were paid. All during this period, Kingfisher Airlines did not sell enough seats to cover the costs, or just spent more money than it earned.
The rise and fall of a ‘King’
That an extravagant, flamboyant, indiscriminate, indiscretion and reckless lifestyle without an element of personal morality; societal ethics and financial discipline can lead to a downfall of unimaginable dimension – is what could be made out from Vijay Mallya’s present cup of woes. Till the other day, Mallya was a much sought-after man, by the business tycoons, government servants, top bureaucrats, leading banks and not to mention of bevy of beauties from tinsel world and flashy women from the elite, socialite and cocktail circles world over. The release of yearly calendar with skimpily clad hot models in cool environs of sun-kissed beaches in island-nations such as Seychelles, Maldives or Sri Lanka was an event that was eagerly looked forward, both by the socialites of the cocktail circuit as well as a few top media barons.
Mallya’s yatchet, personal aircraft, villas world over, palatial bungalows, flashy cars, gold, diamonds, et al, resembled the durbar and life of Lord Indradeva that included gorgeous models always surrounding the King of Good Times.
But the last few days have been terrible for this king of good times whose time seems to have turned for the bad. Worse; this international business tycoon – who waded through the governments, business & media houses like a colossus – was accused by the country’s leading Opposition party in the parliament of sneaking out of the country in a sly with a sheepish look. The media wrote, or rather, screamed, quoting Congress Vice President; “Who allowed Mallya’s escape from the country?” It sounded as if some Dawood Ibrahim or Veerappan or Charles Shobhraj had escaped from the high-security central prison!
While the blame-game is going on in high pitch between the ruling BJP-led NDA and the Congress-led UPA as to “who blessed the mess” created by Mallya and the impunity with which he left the country in-spite of on-going enquiry, the banks which have lent loans to the tune of several thousand crores are sucking their thumbs as to how to recover the loans.
Worse, the banks have come in for severe criticism for turning a blind eye and remaining stoically silent when there was no chance for this liquor baron to return the money; the criticism of the banks by politicians is strident as the former are accused of being harsh on small entrepreneurs and farmers who fail to return the loan in time.
And as if to add to the woes of the banks, a farmer in Tamil Nadu has come out in open against a nationalised bank which seized his tractor for not repaying the loan in time! The comment from public is caustic as well sarcastic; Banks may be right as per rules in confiscating the vehicle for non-payment of loans but what about Dr Vijay Mallya? So, that means rules are only for the underdogs like small entrepreneurs and farmers and not for overlords like Vijay Mallya?
In one way or the other, Vijay Mallya episode is the disturbing manifestation & reflection of an unfortunate reality of crony capitalism being pursued and practiced by the governments ever since Indian economy was opened up in the aftermath of signing of Dunkel Draft – also known as General Agreement on Trade & Tariff (GATT) – in 1991. Every party that has presided over Delhi durbar is equally guilty of turning a blind eye towards the “loot and lust” of the rich and further impoverishment of the poor and the downtrodden.
The ‘gush’ of the fruits of liberalization went for the rich, while the poor is still struggling to cope up with the ‘trickle’ which speaks volumes of the economic disparity and inequality that the economic policies have ushered in.
The timing of his exit from the country – which, of course, Mallya has denied of leaving India through a tweet – is ominous. He is believed to have left India one week before the Supreme Court decided to hear the petition of a consortium of 17 nationalised banks which pleaded the apex court to restrain Mallya from going out of the country. These 17 banks, in all, have lent about Rs 9000 crores loan to scores of business houses owned or partnered by Mallya.
That these banks will find it extremely difficult to recover the loans needs no mention. But what has been a cause of acute pain, literally, is the fate of over 5626 employees belonging to the Kingfisher Airlines who have not been paid salaries to the tune of several crores since 2011. “Many of us have pledged our gold and silver articles to eke out a living. At this age and stage, we are not employable. This fellow had tons of money and months of time to spend socially with models in various countries but never bothered to pay our salaries. Now he is on the run. We do not what to do” said an employee on the conditions of anonymity.
Kingfisher Airlines had stopped paying salaries since 2011, according to claims made by its employees. However, at the closing in 2012, the airlines had 5626 employees including 400 pilots, 60 aircrafts, company’s loss to the tune of Rs 754 crores, Rs 7000 crores debt by March 2012 and in July 2014, KFA declared the top non performing asset of the country with its inability to pay off more than Rs 4000 crores!
That many central government agencies like Security Exchange Board of India (SEBI), Enforcement Directorate (ED), the banking wing of the Union Ministry of Finance, and the CBI started looking into
the ‘debris’ left after Mallya’s exit is a telling comment on the state of affairs.
This one-time hero for many heroines has quickly become a butt of ridicule could be made out from a number of jokes that have been making rounds in the social media. One joke says, and it is apt: “It is not Mallya’s principle to pay interest; and it is not in Mallya’s interest to pay the principal (amount)”. This is too much for a man who rode like a colossus till yesterday; the saying has proved right in Mallya’s case, “If a giant falls, he will go deep under”
What is inexplicable is that inspite of his company KFA and others doing badly, at-least as per their claim, Mallya went on buying spree; in 2007 he bought the Spyker Ferrari Formula One team for a reported Rs 90 million euros; in 2008, he spent a huge sum of Rs 1.80 million dollars to buy items that belonged to Mohandas Karamchand Gandhi at an auction in New York; in 2008, he bought Royal Challengers, Bangalore, cricket team for a whopping 111.6 million dollars; he owned two football clubs – Mohan Bagan AC and East Bengal FC; he is believed to own over 250 vintage cars; he is believed to have bought the most expensive villas over the world including one in Tiwen near Hertfordshire in UK, where he is said to be staying after getting out of the country in the early first week of March.
Even as this story was going to the print, both the houses of parliament had engaged in slugfest, with the Opposition benches accusing the government of having felicitated Mallya’s exit from the country, though Congress vice president Rahul Gandhi did not say it directly. But his jibe was countered by articulate-speaker, Arun Jaitley when he said, “How do you explain the escape of Ottavio Quottrocchi?”
While this tu-tu-mein-mein was going on in the parliament, the common man on the street had only one question. How will the government make Mallya pay to the last paisa? This is a potentially explosive situation. What if the people, who have obtained loans, refuse to pay on one pretext or the other? Meanwhile, former KFA employees are looking around to see from where their ticket for the next meal would come?
By S.A.Hemantha Kumar, from Bengaluru
The question then is why Mallya was lent money when quite clearly Kingfisher Airlines increasingly showed it had a business model that precluded it from earning money. Let us not forget that during this period Air India and Indian Airlines together lost Rs. 43,000 crores. The money lost under Mallya’s stewardship was a measly Rs.4000 crores. But we are not putting out Anant Kumar, Sharad Yadav, Praful Patel and Ajit Singh out to dry for its losses. Why? We do not even want to even find out how much money was made by the politicians and bureaucrats during the last decade on account of the two public sector airlines?
In the entire hullabaloo over Mallya’s last flight to the cooler and more salubrious climes of Hertfordshire (remember in Hertford, Hereford and Hampshire hurricanes hardly happen!) we are forgetting the bankers who lent Kingfisher Airlines for something quite as spurious as its brand name. We are forgetting the officials of the Banking Services department of the Finance Ministry, many of who served on the boards of the banks that lent Kingfisher Airlines money, and the many board directors who sanctioned the loans. Such loans are sanctioned when everybody gets to drink a little at the trough. Now Mallya has flown the coop that nurtured him, and it seems that all others stand absolved.
Forget Mallya. He won’t be coming back soon. The banks can attach his cars and homes in India, but he is clearly out of reach of the “authorities” that don’t really want him back. They probably don’t even want him to live for too long and long for him to take his secrets to his grave. He just turned sixty, but his corpulence looks unhealthy. Mallya being a betting man would not probably bet on his own longevity.
But Mallya in his going is serving one useful purpose. It takes away the focus on how other “industrialists” fund their lavish lifestyles and have created empires overseas. Anil Agarwal and the two Ruia brothers, Shashi and Ravi, are now bigger abroad than in India. Not long ago Nitin Gadkari was cruising on the Essar yatch berthed at Cannes. Our “industrialists” all use their company assets for personal pleasure. Company jets and lavish company homes are meant only for personal use and for the pleasure of others. Money is routinely extracted from corporate coffers not only for their girl friends and mistresses, but also for their prostitutes in government and politics.
Money flows from our business houses to political groups like Naxalites in Bastar and ULFA in Assam, in addition to all the mainstream political parties. The not too industrious industrialists, most of who make most of their money from the PSU banks, also fund the hedonistic political lifestyle of our elite. Why is the RBI not blowing its whistle to stop this? Why is the Department of Company Affairs so silent? One can understand Arun Jaitely acquiescing to this, but what keeps Raghuram Rajan from reading the riot act to the banks?
The problem is that we are far too invested in this system. If the banks tighten up, as many as six of our top ten business houses will fold up or will have to be dismantled. In other words really restructured, except for Reliance Industries, Tata’s and Aditya Birla, all other major business houses are over leveraged and mortally indebted. If we rock the boats now, many will capsize. The economy will further slowdown. Mallya is relatively small fish. The big sharks are still circling the banks. Anil Ambani, Gautam Adani, GMR and GVK, Lanco are all well known big fish.
Will the Prime Minster please stand up in Parliament and assure the nation that all the moneys lent to them are as per norms and prudential banking practices, and that the loans are not being ever greened? Will Rahul Gandhi demand that the PM gives the nation an assurance on this? I don’t think so. Both are betting on short public memories. We love gladiatorial sports and the Roman emperors best understood mass psychology. We have plenty of pilgrims to feed the lions and the public’s frenzy.
By Mohan Guruswamy