Vijay Mallya has hit back after one of India’s leading banks declared him a “wilful defaulter” following the collapse of his Kingfisher Airlines.
The flamboyant liquor tycoon threatened yesterday to launch legal action against United Bank of India.
The Calcutta-based lender is owed about $60 million by Kingfisher out of total debts of $1.5 billion. The decision to name the businessman, who is fighting to repair the finances of his troubled empire and to salvage his reputation, a “wilful defaulter” will make it difficult for him or his companies to raise funds from traditional banks. That, in turn, could force him to step down as chairman of companies including United Spirits, India’s biggest liquor company, which is controlled by Diageo, of Britain.
“They are making me a bakra [fall guy] because they want to set an example for other defaulters,” Mr Mallya said. “Let them prove me as a wilful defaulter, after hearing me out. Then I have recourse to law.” A spokesman for Mr Mallya added that he “strongly denied” the allegation and would defend himself “vigorously”.
A statement from Kingfisher Airlines, also named as a wilful defaulter by the lender, said: “It is not possible for a bank to simply declare anybody as a wilful defaulter without following due process. We have robust and comprehensive answers backed by documentation to challenge any such move.”
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Diageo declined to comment on whether it would seek the removal of Mr Mallya as chairman of United Spirits.
Kingfisher Airlines, which was founded by Mr Mallya in 2004 and never turned a profit, was stripped of its flying licence two years ago after running up huge debts to banks, airports, fuel companies and others. Hundreds of staff whose salaries had been left unpaid for months finally precipitated the airline’s collapse by going on an indefinite strike.
The next step will be for the Reserve Bank of India to confirm him as a wilful defaulter and add his name to an official list on its website. Mr Mallya has been asked to appear in person before the bank to defend himself.
Even if he succeeds in overturning the UBI decision, Mr Mallya’s troubles will not end there because several other banks are pursuing similar actions against him.
Once one of India’s richest men with a fortune worth more than $1 billion, the self-declared “King of Good Times” inherited his initial fortune from his family’s industrial holdings in India’s brewing and drinks industry. Later he branched out into other businesses, including airlines and sports teams, with mixed success.
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