Not so easy getting Mallya back to India

Vidya Ram | Updated on March 08, 2018

Less shaky than it seems Mallya’s defence   -  Reuters

India needs to prove deception and fraud, as against business failure at a time when the global economy too was under stress

Can India pull off a legal first by succeeding in extraditing an Indian citizen from Britain, following court proceedings? Britain and India signed an extradition treaty in 1992, but in the past 25 years there has been just one successful extradition: that of Samirbhai Vinuhbhai Patel wanted in connection with the Gujarat riots. Patel, unlike others, did not oppose the extradition request, therefore a full hearing in the case wasn’t necessary.

There are many reasons for the lack of success of such extraditions. Britain’s extradition system is tiered, with much lower bars for EU states. While a EU state would just have to show that the conduct at issue would have amounted to a criminal offence if it had occurred in the UK inviting minimum levels of punishment, in the case of India (which falls into a separate category alongside Singapore, Brazil and the UAE) a judge would have to be convinced the case would amount to a criminal offence in both countries, and that there is prima facie evidence of guilt, as well as the usual questions around prison conditions and human rights. The two most recent attempts at extradition (on which verdicts were delivered by the court in early November) failed on different grounds — the first on conditions in Tihar Jail, and the second over the length of time that had elapsed since the alleged fraud had taken place.

Early optimism

Ahead of the hearings to extradite Vijay Mallya which commenced this week, there was much reason for India to be optimistic: the swift passage of the case from Mallya’s arrest in April is testament to the coordinated and responsive approach adopted by Indian agencies in pursuing the case: documents were swiftly made available, written responses to the defence case (exchanged in the course of case management hearings) were swiftly handed in, and some issues were dealt with pre-emptively, such as the offer of assurances around conditions at Arthur Road jail in Mumbai. The court date remained firmly in the diary despite new developments such as the addition of charges around money-laundering, and the defence’s repeated expressions of scepticism about the prosecution’s ability to deliver on time.

In court on Monday, barrister Mark Summers, representing the Crown Prosecution Service on behalf of India, outlined a detailed, complex, three-fold case pegged around fraud over a loan by IDBI Bank made as part of a wider loan issued by a consortium of banks, including the State Bank of India (the money-laundering charges with respect to the IDBI Bank loan have so far firmly taken a backseat though they have not been dropped altogether). He sought to establish how Mallya had wilfully misrepresented the condition of the business and the value of the guarantees he offered in the application for a package of loans, spent the funds when they were disbursed by means that were not intended, and attempted to squirrel away the money when the loans were recalled. The combined were not the actions of an “honest” man, Summers told the court.

Fraud or business bust?

Yet the past two days have highlighted the uphill task facing India: Can it prove deliberate deception and fraud on the part of Mallya rather than a case of business failure in a challenging sector, at a challenging time for the global economy, under additional pressures back home? “The critical prima facie question is could a reasonable jury reach a safe conclusion that this was a deliberate plan to go to IDBI with the intention to default on that loan…or was it a business failure?” asked Clare Montgomery, a well-known, articulate London barrister who is leading the case on behalf of Mallya.

She has methodically sought to challenge, point by point, the Government’s case, first in her opening and through two expert witnesses, one focussed on the aviation sector and the other on banking. Together she’s sought to build the picture of a person and a company that were making “every effort”, including through the infusion of “substantial funds” to improve performance in the face of “severe constraints”. While so far prison conditions have had only a cursory reference (in her opening Montgomery referred to Arthur Road and Byculla jails, and suggested that the Government was unable and unwilling to remedy breaches of court orders, and that Russia was “a lot better than India” when granting access to external experts), politics has reared its head often.

Montgomery has repeatedly alluded to the impact that delays to the opening up of the sector to foreign investment had on the airline (as well as assessments of them at the time of the loan application in 2009, when Kingfisher was looking to be profitable by 2011).

Montgomery also sought to question the decision of the banks back in 2016 to reject an offer from Mallya to repay up to 80 per cent of his liabilities, suggesting political motivations may have been at play. Next week is likely to see more testimony focusing on India’s political landscape, building on Montgomery’s contention that political motivations spurred CBI and ED investigations, with electoral cycles playing a role. “The whole case has been politicised by the BJP, the Congress and Shiv Sena. They all treat it as an opportunity to make political capital on the assumption there was fraud,” she told the court.

They’ve also attacked another stream of the prosecution around the channelling of funds, including to Force India, with the aviation witness insisting it was common practice for the sector for tie-ins between the “sexy” businesses of aviation and motor racing, highlighting none other than Richard Branson.

Much uncertainty

A week into the case, much remains uncertain. There will undoubtedly be more revelations on both sides, and more controversy, once the case turns to the political situation in India, and prison conditions. One thing is certain though: whichever way the case goes, it will not be the end of Mallya’s legal battles in Britain. On Friday, Bloomberg reported that an injunction was served on Mallya for his assets worldwide, with an attempt by his lawyers to overturn it successfully thwarted on Friday.

A separate case over a $40-million payment to Mallya by Diageo is also set to go through the commercial courts.

Published on December 10, 2017

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