(Bloomberg) -- Vijay Mallya dishonestly used bank loans to fund his Formula One racing team and a private jet, a lawyer for Indian prosecutors said while urging a London court to extradite the Kingfisher Airlines Ltd. founder to face fraud and money-laundering charges.
India wants the booze and motor-racing tycoon for a trial for allegedly defaulting on a series of loans from the state-owned IDBI Bank Ltd. for his failing airline that were obtained under false pretenses.
The 61-year-old deliberately provided worthless collateral for the loans and used the proceeds to prop up his Force India motor-racing team as well as pay for the lease of his private jet, Mark Summers, a lawyer for Indian prosecutors, said Monday in court papers at the start of a two-week extradition hearing.
“The court is invited to disregard the defendant’s grandiose narrative,” Summers said. “Pruned of rhetoric and hyperbole, there is, despite the obviously high-profile nature of this case in India, nothing strange or remarkable about the government’s intention to prosecute.”
Mallya, who is free on 650,000-pound ($879,000) bail, was arrested in London in April after a consortium of 17 banks accused him of willfully defaulting on more than 91 billion rupees ($1.4 billion) in debt accumulated by the airline that he founded in 2005 and shut down seven years later. The prosecution argues that he overstated the value of securities including Kingfisher’s brand value, the rights to aircraft and the company’s revenue.
The executive, wearing a navy pin-striped suit with his trademark long, gray hair, told reporters during an unexpected court evacuation before the hearing Monday that “the allegations are baseless, unfounded.”
Mallya, dubbed the “king of good times,” moved to England a year ago, saying he wanted to be closer to his children. He’s since refused to return to India, claiming he fears an unfair trial and that government agencies are pursuing a biased investigation. He is fighting extradition on that basis as well as citing human-rights issues around prison conditions in India.
His trial lawyer, Clare Montgomery, dismissed the prosecution’s suggestion that Kingfisher’s corporate jet was for Mallya’s "exclusive and personal use” as untrue, and said the payments to Force India were previously known.
“At the heart of this request lies a flawed criminal case,” Montgomery said in filings. The allegations are driven “by politicians of every stripe, all of whom stand only to gain from the demonization of KFA’s former senior executives, the bankers who lent to it, and -- crucially -- the man who is now presented as the embodiment of all the ills of capitalism in contemporary India, Dr. Mallya.”
After taking over a beer-and-liquor empire from his father in the 1980s, Mallya built Kingfisher Airlines into one of India’s leading carriers until it was grounded amid mounting debt in 2012.
One of those rivals, Diageo Plc, filed a suit against him last month to recover a $40 million payment made when he was ousted from United Spirits Ltd. after Diageo purchased a controlling stake. It’s also seeking about $141 million over questionable payments made by companies affiliated with Mallya.
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