An Indian beer tycoon dubbed The King Of Good Times claimed billions in loans he could never repay for his failing airline, a court heard today.
Vijay Mallya, 61, said his struggling airline would be profitable by 2011 and now faces fraud charges in India after the firm collapsed with an estimated $1.3billion of debts.
The fugitive fled to Britain in March 2016 after Kingfisher Airlines failed due to enormous unpaid loans, bills and wages five years ago, it is said.
The flamboyant magnate defaulted on huge loans from a state-run bank in India and allegedly misused the funds by rerouting them through the Force India F1 team.
Vijay Mallya, 61, (pictured outside Westminster Magistrates’ Court on Monday) has a stake in the Force India F1 team
Mallya (pictured) is known for his lavish lifestyle and has been compared to Virgin billionaire Richard Branson
Mallya appeared at Westminster Magistrates’ Court today wearing a dark pinstripe suit, rings on his fingers, hair worn in a mullet and chain-smoking cigars.
Mark Summers, prosecuting, told Mallya’s extradition hearing: ‘This airline was in trouble at this stage which is why it was seeking financial help from a large number of banks for a large amount of money.
‘It was claiming that it would emerge profitable in the near future.’
There were two loans from IDBI – a five-year loan for £9.5billion made on October 1, 2009 and a six-month loan for £1.5 billion on October 7, 2009.
Mr Summers said the loans were sanctioned ‘on the basis that this is an airline that is going to turn profitable in its business plan by 2011, despite the fact that it had not been profitable at any point.
‘That is what emerges from their prognosis as being given to the bank and the bank is then able to sanction these loans – this was just wrong.
‘It is no coincidence that the repayment plan was set to begin in February 2011.’
Guarantees were based on the power of the Kingfisher brand as a brewing and spirits mainstay, aircrafts and on the word of Mallya himself, the court heard.
Mallya (right) appeared at Westminster Magistrates’ Court today wearing a dark pinstripe suit, rings on his fingers, hair worn in a mullet and chain-smoking cigars (left)
He told reporters outside court that doubters in the Force India F1 team would have to ‘eat their words.’
Mallya, who is known as the King of Good Times, faces conspiracy to commit fraud charges in relation to the hefty loans.
He allegedly laundered money through a variety of banks across Europe and diverted funds to tax havens.
A Mumbai court issued a warrant for his arrest and sent Metropolitan Police an extradition request in February.
The businessman was arrested in April and paid a £650,000 security to secure his release on conditional bail.
Mallya, of Tewin, Herfordshire, earlier dismissed the allegations on his @TheVijayMallya Twitter account, saying they are ‘media hype’.
He added: ‘I did not flee from India and neither am I an absconder.’
The businessman was arrested in April and paid a £650,000 security to secure his release on conditional bail
The tycoon, who is known for his lavish lifestyle, has a stake in India’s only Formula One team, Force India, and has been compared to Virgin billionaire Richard Branson.
Indian authorities claim that between 31 December 2008 and 28 November 2009 he conspired together with A.Raghunathan, Yogesh Agarwal and B.K.Batra to defraud IDBI Bank by dishonestly causing or permitting IDBA Bank to loan 9,000 million Rupees to Kingfisher Airlines Limited.
He is further charged with money laundering. The extradition hearing is expected to last for a fortnight.
Mark Summers, for the Indian government, told the hearing: ‘The government says that there are three reasons why the court could conclude that this was a loan that the defendant never intended to repay.
‘His company was in intensive care, the market was in intensive care, it was heading only in one direction.
‘As it went down it was going to sustain large losses and the defendant had a choice – either take these losses yourself and impose on your own lavish lifestyle or try and palm them off to the bank.’
The hearing continues.