Corporate debt restructure (CDR) can be a fraud if a lender shows up his vulnerability as a reason for his failure to recover debt from a rich borrower. It’s the fraud especially when the public money is involved. It’s cheating when the government ruthless on common taxpayers spells out its intention to bail out a self-indulgent business house.
The lenders- a 13-bank consortium- could not figure out the way to get back money from the king of good time, after many rounds of deliberations and they have requested him to come out with a ‘credible’ plan. What a credible plan can the borrower propose other than finding a safe escape rout for himself?
And the debt burden they are trying to soften is not a small amount. It’s hovering around Rs.7057.87-crore that is almost equal to the budget size of the Bangalore city municipality. And whose money is it, after all?
Banks are not the only ones who are at Vijay Mallya’s mercy. His Kingfisher Airlines has defaulted payments wherever it found it possible. Oil companies, airports, and leasing companies are praying for Mallya’s prosperity so that they can fill their emptying coffers.
But, there is no apparent link between Mallya’s prosperity and his debt repayment. As the trend goes, with a rich borrower getting richer his defaulting rates go high and the lenders rally behind him with all possible CDR formulae. And the government finds itself in a fix and starts looking for ways and means to bail him out, because it would be a question of survival for the public companies for which the rich is owed to pay or repay.
So, better the oil companies and the airports bet on the pressurised government for the bail out package rather than indulging in a pointless prayer to the listless god. Let the economy go to dogs. If the bail out widens the fiscal deficit gap, then there is the tax tool to peg it up. Rest assure when the expert economist on the helm.
And then, Mallya is a Rajyasabha member. It would not be difficult for him to pull strings from the very corridor of power. He knows how importnat the power is, especially after Jitin Prasada spoilt his design to get a waiver of Rs. 600 crore from HPCL, last year. And you should have seen how cleverly he handled politicians in Karnataka to ensure his entry to the upper house. It seemed, then, the loss of Kingfisher Airlines was the gain of the legislators who supported his candidature. Fortunes of each JD(S) MLA went up by a Fortuner and a purse of cash. And the media reports on the political corruption were effectively stalled thanks to his efficient political secretary who is also his media advisor. An ex-journalist, she knows how to handle the hacks.
The success formula in this sort of riddle seems to be one, and it is amazing to note a similarity in the methods of Mallya to that of his fellow Rajyasabha member elected from Karnataka. Rajeev Chandrasheakr is now a media baron in the state claiming his iconic right over Namma Bengaluru got entry to the Rajyasabha through the same JD(S) rout as Mallya did and before that he had got a CDR settlement with the banks and shored his company up from the debt burden of Rs.2000 crore.
It’s a old story that Rajeev Chandrashekar and his father-in-law TPG Nambiyar stage managed a quarrel between them that ended in an out-of-court settlement. Nambiayar had complained that his son-in-law had fraudulently diverted funds from BPL Ltd to subsidiary companies floated subsequently after the flagship company availed bank loans to the tune of Rs. 2000 crore. He managed to get a CDR scheme, in 2005, which converted the debt burden to mere Rs.80 crore to be repaid in equated monthly installments.
But, till now not an installment is paid and the banks are not complaining. We know how the MP did this. But, we won’t write it because we are scared he will pull us to the court. Moreover, he is in the forefront of the anti-corruption crusade, these days.
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