LONDON: A court in London heard on Monday how fugitive businessman Vijay Mallya, founder of the now bust Kingfisher Airlines, had sought corporate loans worth Rs 2,000 crore from a consortium of Indian banks in 2009 to be able to meet critical obligations to his suppliers.
The crown prosecution stated that Mallya's Kingfisher Airlines had made the same set of security guarantees for all the loans it sought, which suggested fraud. Over the next few days, the prosecution will have to prove that the criminal charges against Mallya are justified, and that he should be extradited to India to face trial. The crown prosecution said the securities Mallya had offered on Kingfisher's loans turned out to be "symbolic and notional" and that he gave misleading projections of profits his airline would make in 2011.
Westminster Magistrates' Court heard that Mallya, 61, had given his Kingfisher brand, claiming it was worth Rs 3,400 crore, as security, as well as offered a corporate guarantee from United Brewery (Holding) Ltd and a personal guarantee from himself in the case of defaulting on three loans from IDBI.
The court heard the Rs 200 crore IDBI loan was also used to pay the rent of a corporate jet, owned by Kingfisher but "exclusively used by Dr Mallya, his family and friends". It was also used to clear overdrafts, interest on other loans and other bank charges, all of which was expressly prohibited by the terms of the loan, Summers said.
Mallya had also promised his airline would go into profit in 2011 and promised promoters would infuse $400 million of equity into his airline. He also offered to sell 12 aircraft Kingfisher had bought on higher purchase and Grant Thornton had reviewed this business plan.
Summers argued: "These were loans the defendant never intended to repay. His company was in intensive care, the market was too. His company was heading only in one direction, it was going to fail. As it went down it was going to sustain huge losses. You have a choice - either take them yourself and impinge on your own lifestyle or palm them off to a bank, in particular state-owned banks." Ex-Kingfisher airlines hostess Pinky Lalwani sat in the public gallery in a grey dress and black ankle boots looking anxious watching the trial. CBI officials were also in the court. Mallya, who sat in the dock, only confirmed his date of birth and name.
Outside the court Mallya, who denies all the charges, was surrounded by Indian TV crew. He refused to answer questions and said "all his submissions were with the court". He then lit up a cigar.
The crown prosecution stated that Mallya's Kingfisher Airlines had made the same set of security guarantees for all the loans it sought, which suggested fraud. Over the next few days, the prosecution will have to prove that the criminal charges against Mallya are justified, and that he should be extradited to India to face trial. The crown prosecution said the securities Mallya had offered on Kingfisher's loans turned out to be "symbolic and notional" and that he gave misleading projections of profits his airline would make in 2011.
Westminster Magistrates' Court heard that Mallya, 61, had given his Kingfisher brand, claiming it was worth Rs 3,400 crore, as security, as well as offered a corporate guarantee from United Brewery (Holding) Ltd and a personal guarantee from himself in the case of defaulting on three loans from IDBI.
The court heard the Rs 200 crore IDBI loan was also used to pay the rent of a corporate jet, owned by Kingfisher but "exclusively used by Dr Mallya, his family and friends". It was also used to clear overdrafts, interest on other loans and other bank charges, all of which was expressly prohibited by the terms of the loan, Summers said.
Mallya had also promised his airline would go into profit in 2011 and promised promoters would infuse $400 million of equity into his airline. He also offered to sell 12 aircraft Kingfisher had bought on higher purchase and Grant Thornton had reviewed this business plan.
Summers argued: "These were loans the defendant never intended to repay. His company was in intensive care, the market was too. His company was heading only in one direction, it was going to fail. As it went down it was going to sustain huge losses. You have a choice - either take them yourself and impinge on your own lifestyle or palm them off to a bank, in particular state-owned banks." Ex-Kingfisher airlines hostess Pinky Lalwani sat in the public gallery in a grey dress and black ankle boots looking anxious watching the trial. CBI officials were also in the court. Mallya, who sat in the dock, only confirmed his date of birth and name.
Outside the court Mallya, who denies all the charges, was surrounded by Indian TV crew. He refused to answer questions and said "all his submissions were with the court". He then lit up a cigar.
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