The infamous liquor baron Vijay Mallya will be the first person to face prosecution under the newly brought Fugitive Economic Offenders bill, 2018. Enforcement Directorate (ED), the law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crimes will move the special court for “immediate confiscation” of attached assets valued at over Rs 12,400 crore of Kingfisher owner Vijay Mallya under the new legislation.
The Fugitive Economic Offenders ordinance was approved by cabinet in April this year to address the issue of economic offenders like Vijay Mallya and Nirav Modi avoiding criminal prosecution. The ordinance defines a fugitive economic offender as “a person who has an arrest warrant issued in respect of a scheduled offense and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face criminal prosecution.” The case against Vijay Mallya was registered under the Prevention of Money Laundering Act, 2002 (PMLA) which allows for confiscation and seizure of properties obtained from the laundered money, such actions were still subject to the processes of criminal prosecution. This led to many of individuals accused of money laundering to flee the jurisdiction of Indian courts to avoid criminal prosecution under PMLA and the consequent confiscation of their properties. Therefore the new Fugitive Offenders ordinance was needed for the confiscation of properties of people like Vijay Mallya, Nirav Modi, Lalit Modi etc.
If ED wins the case in court and Vijay Mallya is declared as a fugitive then he will have to present himself before the court within a period six weeks as per the rules of the Fugitive Economic Offenders bill. If Mallya fails to do so then the agency is free to seize Mallya’s assets without the trial commencing in criminal court. The Kingfisher Airline Company run by Vijay Mallya ran into losses since its inception in 2002 and finally closed its operation in 2012. The defunct airline has a loan default case of around Rs 10,000 crore from a consortium of 17 banks. Most of the loans were from public sector banks, with State Bank of India being the largest loan provider. Vijay Mallya was a member of Rajya Sabha between the period of 2002-2008 and 2010-2016, and it is alleged that he used his political influence to get loans from public sector banks. The huge amount of loans which Vijay Mallya got from public sector banks despite his company running in losses shows the vulnerability of these banks under political influence. The major assets attracted by ED under PMLA include a farmhouse in Mandwa in Alibaug, multiple flats in Kingfisher tower in Bengaluru, fixed deposits and 25.14 lakh shares of United Spirits Ltd, 4 crore shares of United Breweries Ltd and 22 lakh shares of Mcdowell Holding Company. According to some analysts, the worth of attached assets is more than the total amount of defaulted loans, therefore, the banks could expect a complete recovery if the auction is carried out.
As per the complaint of ED “Kingfisher Airlines participated in criminal activities which led to the generation and acquisition of Rs 900 crore and was involved with the concealment, possession, acquisition, and use of the proceeds of (the) crime.” The complaint also alleges that Mallya was “an active participant in the generation of proceeds of crime and the activity of money laundering” under PMLA. The position of the company was so bad that HPCL stopped giving it fuel without a payment in cash and airports were not allowing the landing of Kingfisher aircrafts without prior payment. Nonetheless, Vijay Mallya fooled banks using his political influence and got loans. Now this new bill will teach a lesson to people like Vijay Mallya, Nirav Modi, Lalit Modi and other willful defaulters who run out of the country after robbing the money of taxpayers.