Getting Mallya Into Jail Can’t Be The Goal; We Have To Go After His Assets

The revocation of Vijay Mallya’s diplomatic passport is neither here nor there. A diplomatic passport is issued to anyone who is a member of Parliament, and when it is revoked, you revert to your normal passport. So all that Mallya is being deprived of is some special treatment, both at home and abroad.

It is possible to seek his extradition once wrongdoing is clearly provable, but given the ham-handed way in which the Indian media has gone after him, Mallya can well claim in British courts that he won’t get justice in this atmosphere. He will most certainly get to stay on, as was the case with Lalit Modi. He is unlikely to be back in a while.

An ethics committee of the Rajya Sabha headed by Karan Singh is also looking at Mallya’s conduct. But this too does not matter, for Mallya’s term ends in a couple of months. The fact that he owes Rs 9,000 crore to banks is not directly connected to ethics. But expulsion will at least send a strong message.

The Enforcement Directorate is also said to be hot on his trail, looking at the possibility of funds diversion from India to foreign assets. But this will be a long-drawn affair. It is worth recalling that almost none of the 2G or Coalgate scamsters, who surely must have sent money to destinations abroad, has ever been successfully prosecuted for offences. So it is a fair bet they will fail with Mallya too.

The problem with all these approaches in dealing with Mallya is that we are losing focus on the essential point: how to get back the money he owed to banks. Getting him back and putting him in prison is hardly the central issue here, though that can be a secondary objective if he has actually broken laws here.

So, first things first, the goal must be to get at his money: and this means freezing the transfer of his assets in this country. According to this Times of India report, Mallya still had Rs 5,700 crore of assets in the country that are not mortgaged. It is this asset base that courts and banks need to target.

The Supreme Court, which is monitoring this case, should not make the same mistake it made with Subrata Roy, boss of the controversial Sahara group. For defying its orders, Roy was put in jail and ordered to pay Rs 10,000 crore to get out. More than a year later, Roy has made himself at home in Tihar, and is not paying up. The court does not seem to know what to do, though the answer is obvious. What it should have done, and can still do, is appoint an administrator for Sahara’s properties, and liquidate them one by one to recover the Rs 36,000-crore-and-odd dues owed to investors.

In Mallya’s case, apart from seeking a freeze on local assets, a better bet may be to seek punishment for dues owed to employees, the taxman, the provident fund commissioner, etc. These are clearly more provable and may yield some convictions.

What is wrong is trying to get Mallya into jail for a business failure. Failure is not an offence. If, instead, the government goes for logical outcomes by imposing fines for legal transgression, or sending him to jail for offences under the Income Tax or provident funds laws, there is a better chance that Mallya can be extradited, if at all that is required.

For now, the thing to focus on is his domestic assets. Everything else is a wild goose chase. He has offered to pay back Rs 4,000 crore, in stages. The banks have rightly rejected this offer. But this needs to be negotiated upwards. If they can get back their principal (around Rs 7,000 crore), interest can be waived. This negotiation is the place to start, and it can’t even begin if he is sent to jail.