The rise, fall and escape of Vijay Mallya

Kingshuk Nag | Updated on September 25, 2018

Vijay Mallya

Political patronage, which largely helped him grow his empire, could now be helping him remain in exile

Ever since Vijay Mallya said in London that he had met with Finance Minister Arun Jaitley before he left India, all hell has broken loose. Congress and BJP representatives are busy trading charges, blaming each other for allowing Mallya to escape. But getting to the truth behind the Mallya episode is complex.

Courted assiduously by different political parties at different times, Vijay became big, partly, due to this patronage which he milked for his own benefit. In a sense he is the sign of our times, where economic reforms have enabled businesses and businessmen to grow exponentially. But the lack of political reformhas allowed unscrupulous businessmen to milk the system with little fear of law.

The only son of the rich but frugal liquor baron Vittal Mallya, Vijay grew up in Kolkata with his mother. His father lived in Bangalore where he ran breweries.and young Vijay, though he was well provided for, suffered from emotional pangs.

His father warned him that he would not inherit the business if his examination results were not good. This generated insecurity in the mind of the then young Vijay. However, being his father’s only son, Vijay inherited his father’s empire after Vittal died suddenly at the age of 59. Twenty-five--year-old Vijay was now the monarch of all he surveyed. Defying the values of extreme thrift that the father promoted, young Mallya became a spendthrift. He began to exhibit reckless behaviour, in sharp contrast to his father’s reserved nature.

Consequently, Vijay was soon in trouble. In Calcutta, Shaw Wallace was a big name, better regarded than Vijay’s United Breweries. Vijay wanted to acquire Shaw Wallace the moment he heard that the foreign owners wanted to exit.

He tied up with street smart Gulf-based businessman Manu Chhabaria to bid for Shaw Wallace. Mallya wanted to bid solo but FERA laws did not allow him and thus the need for a partner. Vijay’s name was nowhere in the bid.

When the bid was won, Manu refused to acknowledge the claims of Vijay, leaving the overambitious young man fuming. But there was nothing that he could do except turn into an NRI.

New opportunities

Liberalisation in 1991 brought new opportunities and allowed Vijay to rapidly expand his empire.

Taking advantage of the flexibility allowed by liberalised policies, Mallya went for on overdrive and in 1995 his liquor empire became the tenth largest in the world. By 2001, selling 26 million cases of liquor, his company had entered the global ‘top five’ league. When Vijay took over, his companies sold only 2.5 million cases.

A few years later after Manu Chhabaria’s death, Mallya audaciously bid for Shaw Wallace and bought it over. Liquor manufacturers in Karnataka traditionally had close relations with politicians because liquor money powered State politics. Vijay had hit it well with Ramakrishna Hegde, a one time chief minister of the State. Hegde invited a rather willing Vijay to enter politics and in 2002 the liquor baron became a Rajya Sabha MP on a Janata Dal (United) ticket. A year later he joined Janata Party run by Subramaniam Swamy, became its working president and put up numerous candidates (many of whom lost their deposits) for the 2004 Lok Sabha polls.

But his Rajya Sabha tenure helped Mallya build contacts across party lines and New Delhi’s bureaucracy. Even as he expanded the operations of his liquor empire (with Kingfisher beer becoming a global brand), Mallya became more ambitious. He acquired Mohan Bagan and East Bengal football clubs in Kolkata. Using his proximity to the corridors of power, Mallya set up Kingfisher Airlines.

The airline was built as a ‘five star hotel in the air’, offering services at none-too-high rates. Not difficult to imagine, the airline, although loved by customers, was soon in trouble — compounded by a global recession.

Mallya was now before banks and using his clout as an MP managed loans of over ₹9,000 crore that should have been denied. But with the aviation business on the downturn because of global recession, the airline tanked. Even as Kingfisher Airlines sank, Mallya made an attempt to recover by selling off equity in his liquor and brewing company to foreign partners. He allegedly also diverted ₹1,221 crore from his companies to private accounts abroad.

By now the law enforcement agencies were closing in on him. Tipped that he could be arrested, Mallya, using his diplomatic passport, scooted abroad overnight, his girlfriend in tow. The fact that a look-out notice for him had been downgraded a month before he fled on March 2, 2016, made Mallya’s escape easy.

Since then, Mallya is parked in London and even though extradition efforts are on, he could well manage to hang on there. Whatever happens, one thing is clear: economic reforms without political reforms (which would limit the role of money) has played truant with our democracy.

The writer is an author and senior journalist.

Published on September 25, 2018

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