The much-awaited extradition hearing of liquor tycoon Vijay Mallya kicks off finally in central London. The hearing was delayed as the court had to be evacuated after a fire alarm went off.
Over the next 10 days, Chief Magistrate at Westminster Magistrate’s Court Emma Arbuthnot will hear the case presented by Britain’s Crown Prosecution Service on behalf of the Indian government, and the defence on which Mr. Mallya will hope to thwart efforts to return him to India to face prosecution.
Our London Correspondent Vidya Ram updates from the hearing.
The entire case revolves around the ₹1,000-crore loan given by the IDBI Bank for the operations of Kingfisher Airlines, which Indian investigating agencies claim was laundered to buy assets abroad. The ED has now said it has topped up the evidence with more facts, and as per its latest revelations, most of the ₹6,000 crore given as loans, too, was laundered. [ As evidence mounts, Mallya can no longer take it easy ]
10:20 pm: The Prosecution concluded its opening argument saying "government has shown prima facie case."
10:00 pm: Dealing with Mr. Mallya’s response when banks recalled the loan, Mr. Summers said it involved ‘squirreling’ away as much as possible.
9:20 pm: The focus now turns towards where the loan went. Having obtained the loan on false financial projections and supported by valueless securities, the payments made out of the ₹150 crore were: transfers to Axis Bank and Bank of Baroda; paying off credit card with ICICI Bank; transfers to India Bulls; for Kingfisher expenses and a chunk of it was sent to HSBC in London and also to J&K Bank. The ₹750 crore loan amount was used in part to pay rent on corporate jet and outstanding tax obligations. “Defendant believed paying round robin between bank loans was legitimate,” said. Mr. Summers. One written testimony cited says “this corporate jet was exclusively used by Vijay Mallya.” “The government suggests the Loans were not used for the purposes for which they were sanctioned,” said Mr. Summers.
8:30 pm: The hearing now focuses on brand valuation conducted by two companies — Grant Thornton and Brand Finance. The brand valuation presented to the banks by Kingfisher was, in the government’s view, ‘flatly unrealistic and wrong.’ Kingfisher relied on a much higher brand valuation from Grant Thornton rather than the subsequent one from Brand Finance that was presented to Mr. Mallya in December 2008, said Mr. Summers.
8:20 pm: The optimistic picture presented by Kingfisher in its loan application contrasted with the very gloomy picture presented by internal communications, including one email, which predated the loan application that predicted it would take 10 years to recoup losses. “It’s against that that you have to assess the financial obligations given to the bank, on which the bank relies heavily,” said Mr Summers. He also highlighted misstatements with regard to the value of the Kingfisher brand which had “nothing of the value attached to it.”
8:10 pm : “The government says there are reasons why a court could conclude that this was a loan the defendant never intended to repay,” said Mr. Summers. “His company was in intensive care, the market was in intensive care, it was only heading in one direction, as it went down it was going to sustain huge losses and the defendant had a choice: either take those losses yourself and impinge on your own lifestyle or you try and palm them off onto a bank.”
6:14 pm: In questions asked by IDBI - which asks for net worth of Mallya in late November 2009 - Kingfisher Airlines says it's 1,395 crore but Summers notes no one investigated this. Still going through the various IDBI loan applications. All the applications took place in October and November 2009. Focuses on the applications, role of the bank's credit committee, differing risk assessment nd questions asked of Kingfisher.
5:47 pm: Summers repeatedly cites witness a Mr. Gupta who works at IDBI, or at least worked. The defense cites that gupta had general observations - wasn't personally involved in process
5:22 pm: In their applications, Kingfisher predicts to be profitable by financial year 2011. "That was just wrong," says Summers
5:20 pm: Mark Summers is focussing on two loan applications made to IDBI — a five-year loan for Rs. 950 crore made on October 1, 2009 and a six-month loan for Rs. 150 Crore on October 7, 2009. The latter was said to be for critical payments to overseas vendors. First included SBI appraisal.
5:10 pm: The prosecution is now focusing on loan applications to IDBI bank. The SBI had already sanctioned their share of the loan and there was an appraisal note from them too, says Summers. The application to CBI showed losses in year to March 2009 and further losses for the next six months. The Kingfisher Airlines said in application that its brand value alone was estimated at Rs 3,500 crore. But for Rs 950 crore share, it had a total loan Rs 2,000 crore across various banks. Guarantees offered were related to the brand, aircraft and personal guarantee from Mallya himself, the prosecution argues.
4:50 pm: Summers begins his argument. Providing chronology of loan applications, he goes on to say how Mallya dealt with banks and his conduct thereafter. The role of bankers are relevant only in so far as the loan sanctioned was in breach of banks internal rules, Mr. Summers argues.
Summers says bankers role is not central to their case, though may be to the case in India. For the CPS, it’s the conduct of Mallya that is key to the case, he adds.
4.40 pm: Judge rejects request for him to sit outside the dock to see document from the defence.
4:30 pm : Mallya sits calmly in the dock after court reopens following the fire evacuation delay. Lawyers from both sides have also arrived.
3:50 pm : The alarm is finally turned off. The trial is likely to resume now.
Lead barristers for both sides Clare Montgomery (Vijay Mallya) and Mark Summers (The Crown Prosecution Service for the Indian government) are both Queen's counsellors from the well-known Matrix Chambers. Mark Summers is known for appearing in extradition-related cases.
3.25 pm : Court being evacuated as fire alarm goes off. Vijay Mallya seen leaving the Westminister Magistrate's court following the fire alarm. Photo: Vidya Ram
3.20 pm: The case has generated huge interest as can be seen from the massive queue outside the court room. The case is being heard in the biggest court at the Westminster Magistrates court.
3.15 pm: Mallya responds to media questions by telling everyone to please hear the proceedings.
3 pm : Mallya arrives just ahead of 9.30 am time set by the judge Photo: Vidya Ram
2.50 pm : Britain’s Crown Prosecution Service team, who will be prosecuting the case on India’s behalf, has also arrived
2.30 pm: Members of the CBI team arrive - A four-member team is here in London along with the Enforcement Directorate team
2.25 pm: A large crowd has gathered outside Westminster Magistrate's court. Lawyer Clare Montgomery, who is representing Vijay Mally, has arrived at the court. Photo: Vidya Ram