Circle Of Politicos
- Pranab Mukherjee As FM, said to have helped Mallya get his huge debt restructuring on extremely easy terms
- Ajit Singh As Civil aviation minister in UPA II, sacked DGCA Bharat Bhushan, who asked KFA to pay up the staff
- H.D. Deve Gowda The JD (S) strongman, friendly with Mallya, was instrumental in getting party’s backing for him in Rajya Sabha
- Subramanian Swamy Mallya pipped him to become Janata Party working president, was sacked by Swamy from the post in 2010
- Praful Patel As civil aviation minister, he helped Mallya get a juicy airport hangar slot and ground handling and services tie up with Air India
- Sharad Pawar Extremely close to Mallya and is said to have helped Mallya in getting bank loans for Kingfisher. Also had links with Mallya’s wine company.
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At the end of his book titled The Vijay Mallya Story, business journalist K. Giriprakash sums up the liquor-to-aviation baron: “He is quite a lonely individual, and according to my ‘Deep Throat’, he neither has permanent enemies nor permanent friends”. That is a telling comment on the businessman-turned-politician who has nurtured over decades the right kind of powerful friends across capitals, continents and political dispensations. After all, Mallya’s liquor business runs largely on political patronage. The booze lobby is one of the largest and most prominent financer of elections.
Now, Mallya is holed away in England—not hiding, mind you, and insisting he will be back in the country in April—with the government threatening him with action if he doesn’t pay back loans he took for Kingfisher Airlines. Mallya must be calling his friends. Who in the political establishment has supported the businessman in the past? Many of them continue to hold office. The key question is, will they take his calls?
The first name that comes to mind is old Maratha supremo Sharad Pawar. Mallya’s connection with Pawar dates back to the sourcing of grape produce in Pawar’s constituency Baramati for Mallya’s wine brand Four Seasons. Pawar is also said to have helped Mallya during his Kingfisher days, especially in getting precious finance; even, according to an apocryphal story, vetting the airline’s business plan. Though denied by the Pawar camp, there have also been reports of finance being made available from some Baramati cooperative banks to Kingfisher. “Sharad Pawar, Praful Patel and Vijay Mallya are a threesome and Pawar is very close to Mallya and has helped him in his airline and NCP has been a principal backer of Mallya,” says senior journalist Kumar Ketkar.
Getting loans from banks is perhaps the most audacious play of Mallya’s political power—he exploited his contacts to get banks advance loans even when his airline was bleeding and was unable to repay. The Indian banking system is highly vulnerable to influential promoters and political pressures. Many observers have hinted at the role played by Pranab Mukherjee, then the Union finance minister, in helping Mallya get loans, especially from IDBI bank, which has an exposure of Rs 900 crore to KFA. Mallya has a strong Calcutta connection—he was born there and attended La Martiniere for Boys and St Xavier’s college. Kingfisher insiders say Mallya had little time for the Left, and Pranab Mukherjee was cultivated.
“Banks gave loans because of Mallya’s political goodwill,” says a top aviation source. “Obviously, if the chairmen of banks can give loans of this nature, it’s either because of pressure from the top or some kind of signal saying, ‘help him out’. There’s nothing wrong in that, but they should have put in some caveats, not just taking more personal guarantees.” A personal guarantee is normally taken to ensure a promoter has ‘skin in the game’.
In 2010, Kingfisher’s debts of around Rs 8,000 crore were restructured with a nine-year repayment window, including a two-year moratorium. What raised eyebrows was the higher share price at which banks took stake in the firm. At the time, however, Mallya was confident of repaying within the tenure. “I don’t think it was possible to get that kind of debt recast,” says the source, adding that it’s difficult to pinpoint blame. “But he was politically not savvy enough to get FDI in airlines.”
In KFA’s teething days, Mallya got his first NOC from the Vajpayee government when Shahnawaz Hussain was the aviation minister. At that time, say sources, he was also friendly with the powerful Pramod Mahajan. All his clearances and approvals came during this regime. Incidentally, current power minister Piyush Goyal was on the SBI board between 2004 and 2008, when KFA was seeking loans. SBI has the largest exposure of about Rs 1,600 crore with KFA.
Things did not change when, in 2004, the Congress-led UPA came to power and NCP leader Praful Patel became aviation minister. There has been much talk about the Mallya-Patel alliance that enabled KFA to get favours that helped it in its operations as well as in getting bank loans. This includes Patel helping him get extended credit in 2008-09, when oil companies had just about started to refuse fuel to KFA.
Most importantly, Patel allowed KFA preferential space in the airports where Air India (then Indian Airlines) operated, much to the envy of other airlines. Says BJP ideologue Mohan Guruswamy, “Praful Patel gave him terminal slots with Indian Airlines, unavailable to other airlines. This was clearly special treatment.” At the same time, says aviation consultant Mark Martin, maintenance, ground handling and airport service of KFA was outsourced to Air India. “Although Air India made some money out of the deal, this was unprecedented and was done at the behest of Patel.”
Even after the Praful Patel era, Mallya did not lose his hold over the Union civil aviation ministry. In July 2012, then director general of civil aviation (DGCA) E.K. Bharat Bhushan was sacked almost overnight by then civil aviation minister Ajit Singh. Although Singh denied it, the grapevine had it that Bhushan was removed for raising security concerns regarding the cash-strapped, loss-making KFA and issuing it a notice to start paying its employees. Obviously, instructions came from the UPA ministry end.
Mallya’s own tryst with active politics was not a happy one as the Janata Party failed to get even a single seat in Karnataka polls when he was its working president from 2003 to 2010. But he used his clout to get himself elected for a second stint in Rajya Sabha with support from BJP and JD(S), though there are reports that he also approached the Shiv Sena to get its support for his second Rajya Sabha term. He is still a serving member of the upper house.
If all fails, Mallya always has the support of the local political establishment of Karnataka. He was friendly with politicians like H.D. Deve Gowda of the JD(S)—who has stood up for him—S.M. Krishna of the Congress and veterans like the late R.K. Hegde. “He (Mallya) had a lot of goodwill as an industrialist from Karnataka. But what’s happening now is that Mallya is being seen as a ‘cheat’. The truth lies in between. Every party has used him and benefited from him. There’s no doubt about it,” says a Karnataka legislator. “There’s a village saying: Thola gundige biddarey, aalige ondu kallu. (When a wolf falls into a ditch, everyone has a stone to throw),” he adds.
Actually, Mallya’s political clout is visible from the fact that barring banks, none of the government companies have spoken out against him or KFA. Nor has Air India or the oil companies, many of whom had huge dues from KFA. That should mean something.
By Arindam Mukherjee with Ajay Sukumaran
