Vijay Mallya’s defence today brought in a banking expert at his extradition trial as a witness to analyse the documents used by the liquor baron to seek loans from Indian banks for his then struggling Kingfisher Airlines and emphasise that he had no intention to act “fraudulently”.
Paul Rex deposed on day three of the ongoing trial at Westminster Magistrates' Court in London to determine whether the 61-year-old businessman can be forced to return to India to face charges of fraud and money laundering allegedly amounting to around Rs 9,000 crores.
Mallya’s Defence Counsel, Clare Montgomery, today sought to back up her opening arguments that the Crown Prosecution Service – on behalf of the Indian government – had failed to establish a prima facie case of fraud against her client.
The testimony by Rex, who was described as a banker by profession who has served as an independent expert in the field for over 20 years, was used to highlight that Mallya had no intention to act “fraudulently”.
While the CPS stand is that Mallya did not intend to repay the loans he sought because his airline's demise was inevitable, Montgomery is trying to establish that Kingfisher Airlines was suffering from consequences of a wider global financial crisis around 2009-2010 and that its failure was a result of factors beyond the company's control.
Going over parts of his written witness statements, the banking expert pointed to an appraisal in February 2012 by SBI presented to the Reserve Bank of India on the Kingfisher Airlines loan, seeking its recategorisation from “sub-standard” to “standard”.
Rex, who highlighted that he has also served as an expert in a previous litigation involving State Bank of India and the Board of Control for Cricket in India in the late 1990s, told the court that “banks tend to behave in a herd-like manner” and hold their central banks in a very “high degree of deference”.
Their assessment at this time is “quite straightforward”, that despite facing severe constraints every effort is being made by the airline including an infusion of substantial funds, he noted. “SBI is the largest bank in India and one of the most reputable...If it was another bank, I would take note of the fact that SBI had supported a business in a positive way,” Rex said.
The witness is likely to remain central to Thursday's hearing, with CPS barrister Mark Summers set to cross-examine him later in the day.
Indian government sources have described the CPS case as “very strong” and claimed they remain confident that based purely on the “merits of the case” and “documentary evidence”, an Indian government victory is assured.
Mallya, via his legal team, had claimed earlier in the week that the case against him was "politically motivated" and that it was being used as an opportunity to make "political capital" by the ruling BJP as well as Congress and Shiv Sena.
Laying out her counter-arguments before Judge Emma Arbuthnot, Montgomery had also called into question the "admissibility" of some of the evidence submitted by the Crown Prosecution Service, on behalf of the Indian government. She claimed that much of the material was questionable and there were at least a dozen documents submitted which read like an identical "template".
The judge has asked both sides to submit a document laying out the factors for and against the admissibility of the evidence submitted by the Indian authorities by the end of this week.
But government sources have asserted that the evidence is based on a set template but the content within the documents cannot be described as a "template".
While the defence claims there is "zero" evidence to support a credible case of fraud against Mallya, the CPS had opened the trial on Monday with a detailed chronology of events to show "by virtue of evidence a prima facie case" against the boss of the now-defunct Kingfisher Airlines.
The prosecution's case rests on "three chapters of dishonesty" by Mallya – misrepresentations to various banks to acquire loans, the misuse of the loans and his conduct after the banks recalled the loans.
"Instead of acting as an honest person and doing what he could to meet his obligations, he sets about erecting lines of defence," CPS counsel Mark Summers told the judge.
The charge of money laundering, for which Mallya had been re-arrested in October, is being focussed on less at this stage with fraud being central to the CPS case.
The hearing today, took place over some "interruptions" while Judge Arbuthnot attended to other cases.
Rex was the second defence witness to take the stand, following aviation expert Dr Humphreys, who had been brought in on Tuesday to support the defence argument that there was no intentional fraud involved in the default on bank loans by the then struggling Kingfisher Airlines.
Mallya, who has been based in the U.K. since March 2016, was arrested by Scotland Yard on an extradition warrant in April this year and has been out on bail on a bond worth 650,000 pounds.
His extradition trial is scheduled to end on Dec. 14, with Friday marked as non-sitting day. A timeframe for a judgement in the case will be determined at the end of the trial after closing arguments have been made.
If the judge rules in favour of extradition at the end of the trial, the UK home secretary must order Mallya's extradition within two months. However, the case can go through a series of appeals in higher UK courts before arriving at a conclusion.
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