UK Courts Approve Extradition of Kingfisher CEO

A Kingfisher A320 (Photo: marirs [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons)

In the ever exciting world of Indian aviation and the people it involves there has been no greater person who has been surrounded by drama than Vijay Mallya.

He is a well-known business tycoon in India that is ex-chairman of United Spirits, the largest spirits company in India, and is currently still the chairman for United Breweries Group, a conglomerate with businesses in alcohol, aviation, real estate, and more.

Kingfisher Airlines

Mallya used his success at United Breweries Group to create an airline in 2003 under the name of one of it’s most popular beers, Kingfisher. The airline officially began commercial operations in 2005 with a fleet of Airbus A320s and eventually started international operations in 2008 with flights connecting Banglore and London.

The airline, however, never made any money. It was a consistent money pit and poor business decisions such as acquiring the failing Air Deccan in 2007 only made matters worse with accusations that the acquisitions team failed in their due diligence.

Over the years the airline was consistently in the news for losing but still being somehow viable. Kingfisher’s bank accounts were frozen twice in 2011 by the government due to nonpayment of taxes. By 2012, the airline had accumulated losses of nearly $1 billion.

The airline later lost its operating certificate in the fourth quarter of 2012 with debts still outstanding to Indian banks, leaving many Kingfisher employees without pay for months. United Breweries is still paying off debts from the carrier as the entire fiasco of the airline’s collapse hasn’t been settled.

Failure and Loan Recovery

In February 2013, lenders began the recovery process for the loans given to Kingfisher that were defaulted on. A major lender, the State Bank of India, marked Mallya and two of his companies Kingfisher Airlines and United Breweries Holdings as willful defaulters.

Vijya Mallya has been accused of stealing money from the airline and subsequently being partially responsible for the airline’s collapse. He maintains that the failure of the airline was an uncontrollable business failure resulting from market effects and high government taxation.

Mallya Leaves India

Mallya left India in 2016 shortly after it came to light that shady business dealings may have transpired between various parties involving Mallya. India subsequently followed up with an extradition request in February 2017 due to pending investigations led by India’s Central Bureau of Investigation and the Enforcement Directorate, the entity handling financial crimes.

He then surrendered to Scotland Yard in April of that year and was released on bail shortly after. In June of 2017, the first set of hearings began and Mallya was given an extension of his bail term, further pushing back his bail trial to December.

In October of 2017, another charge is brought against him jointly by the CBI and ED for money laundering.

Extradition Trials

The court trial in December proved to be the mess that was expected by most, accusations were thrown back and forth. Mallya’s defense tried to argue that the case against him was “politically motivated” and has ties to current Prime Minister Narendra Modi who is currently seeking re-election this year. Modi has built his legacy on being tough on corruption. Prosecuting wealthy individuals accused of crimes may help improve his image in an increasingly shaky election.

After this the defense then sought to bring into question the conditions of Arthur Road Jail in Mumbai where Mallya would be held in India, arguing that the jail doesn’t meet basic humanitarian standards.

Hearings continued throughout 2018 with new evidence being brought to the court and the UK judge noting that it was blindingly obvious that rules were broken by Indian banks when it came to issuing loans to Kingfisher in the first place.

Extradition Approved

Finally on Dec. 10, 2018, the UK courts ordered the extradition of Mallya, giving the UK Home Secretary two months to sign the final order. The judge cited “clear evidence” of dispersal and misapplication of loan funds along with strong evidence that Mallya was involved in a conspiracy to launder money.

On Feb. 4, 2019, UK Home Secretary Sajid Javid signed the order officially approving Mallya’s extradition to India.

This is not the end of it all though, Mallya and his defense team still have 14 days to apply for an appeal. Mallya will be moving forward with the appeal and how it will fall out remains to be seen.

Mallya is up against quite a few charges in India with lenders adamant that he repay Kingfisher’s debts. The group of Indian banks that are owed money by Kingfisher has successfully obtained freezer orders on Mallya’s global assets and are working on bringing up bankruptcy proceedings in an attempt to recoup unpaid debt worth nearly $1.5 billion. These trials are set to begin sometime in the first half of this year.

Hemal Gosai

Hemal took his first flight at four years old and has been an avgeek since then. When he isn't working as an analyst he's frequently found outside watching planes fly overhead or flying in them. His favorite plane is the 747-8i which Lufthansa thankfully flies to EWR allowing for some great spotting. He firmly believes that the best way to fly between JFK and BOS is via DFW and is always willing to go for that extra elite qualifying mile.
Hemal Gosai