Vijay Mallya wants to sell his assets to pay back loans, but it might be too little too late

Indian tycoon Vijay Mallya arrives at Westminster Magistrates Court in London, Britain, March 16, 2018. REUTERS/Toby Melville/File Photo

After two years of radio silence, liquor baron Vijay Mallya finally released a statement to the media via his Twitter account yesterday. In a five page letter, Mallya explained that he had filed a motion in the Karnataka High Court seeking permission to sell ₹139 billion worth of his assets to cover his outstanding dues with creditors.

Mallya and his firms - the now defunct Kingfisher Airlines and United Breweries - were declared wilful defaulters in late 2015. However, according to him, this designation came despite not one, but two, settlement proposals from his side.

Also, he refuses to concede that the firms defaulted on their loans for any reasons other than “business failure”, when in reality, the government is pursuing fraud charges against him for money laundering and fund diversion. He currently owes a consortium of 17 state-owned banks around ₹99 billion, a bulk of which he says is “on account of interest”.

Noting his disapproval at being made “the poster boy of bank default and lightning rod of public anger”, Mallya said that the overarching desire of government agencies wasn’t to collect evidence of criminal intent or allow him to cover his dues but rather to get him to India to face criminal charges. His extradition hearing in London is scheduled to end in late July.

A pre-emptive plea

The move comes a few days after the Enforcement Directorate (ED) initiated proceedings to declare Mallya a “fugitive economic offender” under a special ordinance and confiscate around ₹125 billion of his assets. This likely scared him into submission.

Mallya concluded the letter by reiterating his desire to settle his dues with the public sector banks. However, other than asserting his desire to comply with the authorities, his plea is unlikely to change anything. He still has no desire to appear in court in India.

Furthermore, his claims that he’s been trying to settle his dues since 2016 bear little credibility. Simply put, if he could pay back his loans in the last few years, he would have.

This is the same person who threw a lavish 60th birthday party for himself merely weeks after Kingfisher Airlines defaulted on more than $1 billion worth of loans from the State Bank of India and had failed to pay its employees’ salaries.

Offering to sell assets that are already slated for confiscation

Most of the assets that Mallya has told the Karnataka High Court that he intends to sell are already on the chopping block, as notified by the ED. These include shares in firms like United Spirits and United Breweries, real estate properties like Kingfisher Villa and deposits with the court.

Furthermore, Mallya is overestimating the value of his assets. For example, the Kingfisher Villa has been slated for sale for two years, but hasn’t been sold yet as buyers have steered clear. The reserve price has since fallen from around ₹850 million to ₹730 million.

The ED has already moved a special court for permission to sell Mallya and his firms’ assets without a trial. A decision is expected within the next few months. In the meantime, if Mallya really wishes to shake off this “poster boy” image, he should come to India and face the charges in court.
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