Mallya: I have become a poster boy of bank default and a lightning rod of public anger

K. Giriprakash Bengaluru | Updated on June 26, 2018 Published on June 26, 2018

Former liquor baron Vijay Mallya in a letter to the media on Tuesday reiterated that he was always willing to settle the dues to the lenders as well as to the Kingfisher Airline employees.

In a series of emails sent to Prime Minister Narendra Modi and Finance Minister Arun Jaitley in April 2016 and released to the media, he clarifies his position regarding the dues that he owed to several banks and to other lenders.

The emails and a mail to the media have been released at a time when the ED has moved a special court in Mumbai to declare Mallya a fugitive offender under the new Fugitive Economic Offenders’ Ordinance that empowers the agency to confiscate all his assets, which are worth Rs 12,500 crore.

Stating that he has become the ``poster boy'' of bank default and a lightning rod of public anger, he said he had written letters to the Prime Minister and the Finance Minister on April 15, 2016 for which he had received no response. "The Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) have filed charge sheets against me with various untenable and blatantly false allegations acting at the behest of the Government and lending Banks. The ED has also attached assets belonging to me, my Group Companies and companies owned and/or controlled by my family under the Prevention of Money Laundering Act (PMLA) currently valued at approximately Rs. 13,900 crores."

He said he had written letters to the chairperson of State Bank of India on May 10, 2016, June 2, 2016 and June 10, 2016 seeking settlement discussions. He said his conduct does not amount to “wilful default.''

The consortium of 17 Banks led by State Bank of India (SBI) made various loans to KFA of approximately Rs 5,500 crore. Recoveries in excess of Rs. 600 crore have since been made through the sale of pledged assets and a further Rs 1,280 crore has been lying deposited with the Hon'ble Karnataka High Court since 2013 (aggregating to in excess of Rs 1,880 crore).

All loans, at all times, were duly approved at the appropriate levels and by the appropriate departments of each bank. Finally, all loans were restructured and consolidated under a Master Debt Recast agreement in December 2010 with permission from the Reserve Bank of India (RBI) as the airline industry in India, as a whole, was undergoing great stress at the time. Thereafter, as late at January 2012, SBI wrote to RBI explaining that the position was beyond KFA’s control whilst, inter alia, confirming that the promoters (UB Group) had infused substantial funds into KFA. A copy of this letter from SBI is also being made public.

Sadly, after the failure of KFA due to circumstances beyond its control, the Consortium of Banks filed proceedings before the Debt Recovery Tribunal for recovery of a principal amount of approximately Rs. 5,000 crores plus unapplied interest of approximately Rs 1,200 crores, totalling approximately Rs. 6,200 crores. It is important to note that the Principal amount involved remains at approximately Rs. 5,000 crores (less the recoveries made from the sale of properties and other recoveries made by the Recovery Officer, DRT) as against the various inaccurate amounts appearing in the media.

"I made two settlement offers to the Banks when proceedings were filed by them in the Honourable Supreme Court of India on March 29, 2016 and April 6, 2016. Against the then outstanding pincipal amount of approximately Rs. 5,000 crores, my first offer was for Rs 4,000 crores (plus the assignment of a claim in a pending suit of approximately Rs. 2,000 crores), which was subsequently revised to Rs 4,400 crores (plus the assignment of the claim in the pending suit of approximately Rs. 2,000 crores). These two offers need to be viewed in the context of One Time Settlements made between Public Sector Banks and Borrowers in the past and more recently the Bank partial recoveries with significant haircuts under the Indian Insolvency and Bankruptcy Code before the National Company Law Tribunal. These two offers are part of the Public record in Supreme Court proceedings. Both offers were rejected by the Banks – the second revised offer was rejected outright by a junior SBI officer present in Court without reference to any of the other Banks.

Mallya in his letter said It would not be out of place to mention that, under my stewardship, UB Group, at its zenith employed more than 66,000 people, most of whom served the Group for 20-30 years. If I was an inconsiderate person who did not believe in looking after employees, we would not have such a track record for so many decades.

Published on June 26, 2018
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