By GR Gopinath
Everyone loves to hate Vijay Mallya. They love to hate him for having such a good time while they can’t escape the drudgery of daily life. Fans flock to him. Look at his Twitter handle. He still has six million followers. He is known to be a charming and generous host, fun-loving, a workaholic who loves his drinks, and a connoisseur of good food, wines, cigars, cars and, of course, scotch. His life is the envy of many, despite the prosecuting agencies and a belligerent media hounding him. After all, even with the Indian government in hot pursuit, he arrives nonchalantly in a Bentley for his extradition trial in a UK court, dressed immaculately and surrounded by personal British body guards.
Amid all the buzz, the real issues are not in focus.
Mallya is under siege from investigating agencies and banks, to whom his now-bankrupt airline owes money. The airline was a publicly listed company controlled by him. Like many Indian listed companies controlled by Indian families, he ran it like his private company. There were independent directors on the board. But in most cases, independent directors are there to fulfil a statutory requirement. They rarely perform their duties or protect the rights of minority shareholders. Nor are they expected to do so by the promoter or controlling shareholders. A flaw lies here. Independent directors must be appointed by minority shareholders and not promoters.
The Kingfisher Airlines board had a galaxy of accomplished people, including a former finance secretary and a retired Sebi chairman.
Fund diversions, back-and-forth transfers between related companies — which Mallya is now accused of — are not rare. Even minority shareholders do not complain when family-controlled businesses dip into the company coffers at will, as long as they get attractive returns. Statutory bodies have not been known to deal with such delinquency punitively, as in the West, though reforms are underway. Transgressions are overlooked when things are going well. All these are open secrets.
If such practices are widespread, why is Mallya being singled out? Especially when Kingfisher Airlines’ original loan amount was a meagre Rs 6,000 crore and pales in significance when compared with the amount on the list of defaulters the Reserve Bank of India put out recently.
Is Mallya more a victim of his flamboyance than loan default? Could it be his continued extravagance and devil-may-care attitude — while his company had mounting bank dues and unpaid salaries — that really did him in? Was his brazen insensitivity — in a society where the middle class gets hauled up by banks for missing an instalment on their housing mortgage — that triggered the hot pursuit by authorities?
He was suddenly abandoned by many powerful politicians across party lines. Many of them were his friends, and were often seen with him on his private jets, yachts and Formula One stands. Did he turn into a political football between two major parties who accuse each other of sheltering a tycoon at the expense of the taxpayers to secure political mileage, as he claimed outside the Westminster magistrates court in London a couple of days ago? Has Mallya been made a poster boy for bad debts, as he told the court and media?
The tragedy is that everyone seems to have, in a sense, forgotten about Kingfisher Airlines. It had 10,000 employees, twice the domestic market share of Air India and twice the national carrier’s network. Kingfisher connected 80 airports, some of them far-flung, and was an admired brand around the world.
The then UPA government and banks should have focussed on trying to save a great asset and infrastructure. It would also have saved the jobs and ensured continuity of air connectivity to remote areas — something the current government is trying to revive through the UDAN scheme. The bank debt could have been converted into equity and Mallya removed from management. The airline could have been put up for auction and jobs saved. Banks would have recovered their money. And the probe on Mallya could have continued.
If Air India and its employees can be saved by pumping in more than Rs 50,000 crore, why not Kingfisher Airlines?
Mallya might never return if charges against him are unproven in the UK courts. In the past, people charged with more serious crimes have not been sent back, citing the terrible conditions and human-rights violations in our prisons.
While the common urban middle class have a love-hate relationship with him, the rich and the powerful, who may be as guilty as him, might love to see him take a fall.
The writer is the founder of Air Deccan, which was acquired by Mallya’s UB Group in 2007. He is also the author of Simply Fly.
Source: Economic Times