Why Mallya is in no hurry to reveal assets to SC
Every time the noose seems to tighten around Vijay Mallya, he comes up with a new strategy to shake himself free.
The liquor tycoon, who owes Indian banks Rs 9,000 crore on account of his failed business Kingfisher Airlines, has now been told by the Supreme Court to disclose all assets owned by him and his family in India and abroad by April 21. That means the apex court would like to know his real worth and his ability to pay back the banks, in the light of the banks seeking SC’s help in recovering the money.
This was soon after a consortium of 17 state-owned banks led by the State Bank of India rejected a Rs 4,000 crore settlement offer from the businessman.
What will be the options before Mallya now? Going by his poor track record of dealing with the Indian banking system and authorities – not paying back loans for ten years, sneaking out of the country on the eve the banks' decision to move against him in court, failing to make an appearance before the Enforcement Directorate for the third time on April 9 on a case of money laundering in the Rs 900-crore IDBI loan fraud case, and asking for time till May – Mallya will be in no hurry to disclose his assets to the apex court within the specified time.
He is likely to ask for more time, citing the voluminous exercise of evaluating his assets, considering these would be spread over several entities in India and abroad (his shareholding in various companies alone is said to be to the tune of Rs 7,000 crore). His lawyers would know that any submission to the SC would mean that Mallya will have to be prepared for some tough questions from the apex court on his reluctance to pay off the debt he owes Indian banks.
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| Subrata Roy, now lodged in Tihar jail, is negotiating deals from prison to sell assets to pay off investors. |
He will have to provide a credible explanation to each of his investments, and that may tread into areas that he would not be too comfortable to reveal. Mallya’s troubles seem to have mounted as new reports link his name to the "Panama Papers" that reveal business entities floated in tax havens by the world’s wealthy to stack their money.
Indian courts have already made observations that "Mallya had not come to the court with clean hands" in reference to an alleged diversion of money to a subsidiary in British Virgin Islands.
Identifying this trail of money will prove to be difficult for Indian authorities, let alone Mallya willingly disclosing it to our courts! This is where the apex court will have to be more specific about the asset disclosure he needs to make, so as to elicit a more specific and credible response from him. One of the reasons why the banks rejected a deal from Mallya is that they are sceptical about the source of the money he offered them in the settlement deal.
If that is the case, only a complete disclosure of his assets will help reassure banks about the legitimacy of the funds that he would put across, going forward. The procedure to bring erring businessmen to book would be long winding, but not impossible, as the Sahara case has shown us.
Sahara’s promoter Subrata Roy, now lodged in Tihar jail, is negotiating deals from prison to sell assets to pay off investors. By keeping up the pressure on Mallya, both the banks and Indian courts have raised hopes that the erring businessman will not go scot-free this time.