This is an article written by my husband Prof N Natarajans on 14.08.2014
Good Times Bad Times
There is an old story about an important task to be done. Four persons named Everybody, Somebody, Anybody and Nobody were available to do it. Everybody was capable of doing it. Anybody could have done it. Somebody should certainly have done it. But Nobody did it.
One is reminded of this story when newspapers reported that CBI has opened investigations about why IDBI Bank advanced a loan of Rs. 9500000000, ie., Rs. 950 crores to Kingfisher Airlines of Vijay Maalya in spite of an internal report warning against such a move. IDBI bank is in good company. It is part of a consortium of 8 public Sector banks led by SBI which together advanced Rs7000 crores. SBI’s own contribution is Rs. 1600 crores. Other banks in the consortium include Bank of Baroda, Corporation Bank, Central Bank of India, Punjab National Bank, and Bank of India. It is not clear whether a similar investigation has been started against other banks, especially SBI.
KINGFISHER is owned by the liquor baron Vijay Maalya, the King of Good times. It started domestic operations in 2005 and international operations in September 2008. It never made any profit and its losses mounted even as the lending banks kept lending to it till the borrowings reached astronomical figures. Eventually it shut down its operations in 2012 as the DGCA suspended its flying license for several violations of Civil Aviation regulations. The airline had locked out its 1500 employees for several days before this suspension. It treated them shabbily and did not pay their salaries for several months. At least one employee is said to have committed suicide. It owes Rs300 crores to Airport Authority of India. In December 2011, CBDT Chairman announced that it was considering legal action against Kingfisher for not paying taxes and may go for prosecution. As of January 10, 2012, Kingfisher Airlines had service tax arrears alone of INR60 crores. Kingfisher also defaulted on paying to the IT Department, the Tax deducted at source from its employees. Since 2008, Kingfisher Airlines was unable to pay the aircraft lease rentals on time. High flying creativity indeed.
In fairness to it, when KFA commenced operations all passengers were treated as esteemed guests. On board and ground services were excellent. When the guests alighted at the Departure Gate at the airport to take a flight, uniformed ushers carried their baggage up to the check-in counter. Elderly guests were delivered their boarding passes without having to stand in the queue. Freebies were distributed on every flight. Cleanliness and food were excellent. Video entertainment was provided. Recorded voice of Vijay Maalya greeted the passengers. Media showered awards on KFA. All this was to build a grand brand image. Banks were impressed with the life style of the King of Good Times and lent to KFA against his personal surety. However KFA was a story of riches to rags in just six years.
To return to our old story, what magic wand did Vijay Maalya wield by which he mesmerised and paralysed Everybody? Why didn’t Anybody stop him in his tracks? Could Somebody have prevented any of the Banks from acting irresponsibly and inflating their NPA? Why didn’t Anybody act? Why did Nobody do the job?
Here Everybody meant the ruling UPA, the main opposition BJP, bureaucrats including the Income Tax Department, Banking Department, RBI, SEBI, DGCA, Boards of individual banks and so on.
Anybody was the two finance ministers of UPA including the current President of India. The financial wizard, PC could have issued directions for caution or the former opposition leaders of BJP could have intervened by posing searching questions in Parliament. RBI’s auditors certainly must have seen a pattern in the Consortium’s recklessness in lending astronomical sums and then converting some of the loans into dud shares of KFA for a price to partially adjust the loan outstanding sums. SEBI could not have been unaware of the goings on. Income Tax department too failed to launch any prosecution.
Now finally a Nobody called CBI, a bird that has gone back to its cage even after being released by the Apex Court, has finally entered the scene. Going by its own track record it will probably work for another 2 years and produce a case document of 30000 pages of non-prosecutable evidence or launch a prosecution that will not succeed. Finally after a fanfare of publicity nothing will come out of the case.
Here is a possible clue to Dr.Vijay Maalya’s outstanding ability to mobilise resources and avoiding any penal action. He was elected Rajya Sabha MP in 2002 and again in 2010 by pooling of votes of various political parties including the Congress and BJP! He does not belong to any party. He is among the 2 richest MPs in Rajya Sabha. KFA may not have paid its employees, but Vijay Maalya is very charitable in making political donations. He needs fear none. This is the message of Indian secularism and consensus politics.
Prof N Natarajan