The Controversial Banking Frauds Involving Vijay Mallya, Nirav Modi, and Vikram Kothari: An Analysis

Introduction

The recent cases involving Vijay Mallya, Nirav Modi, and Vikram Kothari have captivated public and financial communities. These individuals, who have been accused of significant bank frauds, have seen their businesses crumble and personal lives uprooted. This article delves into the complexities of these cases, the investigative processes, and the broader implications for the financial and judicial systems.

The Methods of Bank Loan Misappropriation

There are typically two methods that individuals may use to obtain significant bank loans and evade accountability.

Option 1: Pilfering through Bankruptcy and Flight Option 2: Manipulating Financial Records Through Sibling Interests

These methods highlight the stark contrasts in the practices of those accused of fraud versus more straightforward financial defaults. While option 1 involves leaving the country with the money, option 2 involves a more subtle manipulation of financial records. However, the widespread corruption in the system has ensured that common people are merely spectators, watching the financial elite continue their dubious activities.

Debunking the Speculations

It is essential to understand that a competent court of law, and only a court, can declare fraud. No authority, not even the President, the Chief Justice, or the Prime Minister, can make such a determination without a proper trial and verdict. Those accused of fraud have been businessmen for over 30 years, and while they have indeed been accused of fraud, the evidence may also point towards simple business defaults rather than criminal acts.

For instance, Mallya had outstanding loans for 8 years before the fraud was discovered, with multiple audits and reviews by various bodies. The Reserve Bank of India (RBI) audited his loans internally, statutory auditors reviewed them at least 8 times, and banks auditors inspected them at least 3-4 times. Additionally, concurrent auditors reviewed them at least once a week, and the loans were reviewed at least 24 times by the boards of directors, which included RBI nominees and government nominees. Despite these extensive reviews, his loans were routinely renewed.

Moreover, Mallya remained in India for almost two years after his loans became unpayable. During this period, no fraud allegations were raised. This timing could also be indicative of a political reluctance to confront Mallya, especially during the NDA era from 2014 to 2016.

Similarly, Nirav Modi, who has been in business for nearly 7 years, has neither been mentioned in any audits or inspections conducted by the RBI or board members. Lending large sums without cash margins is not a criminal act, as it is a risky but not illegal practice. Only concrete and irrefutable evidence, as used in Western courts, would be sufficient to brand individuals like Modi and Mallya as criminals.

The Aftermath and Lessons Learned

The aftermath of these fraud allegations has led to a significant shift in public and media perception. Irrefutable evidence is often elusive in India, especially when compared to Western standards. The Indian public and media have embraced the narrative that VIPs like Mallya and Modi are beyond the law, focusing the blame on the PSU banks and the Reserve Bank of India (RBI) for failing in their fundamental duty to safeguard people's savings.

As a result, these individuals found themselves in a desperate situation with no options but to flee the country. This has drawn attention away from the systemic failures within the financial and judicial institutions, which bear a significant responsibility in ensuring that fraud is effectively prevented and punished.

Conclusion

The cases of Vijay Mallya, Nirav Modi, and Vikram Kothari raise critical questions about the robustness of financial systems and the judicial processes. While the accused have faced severe consequences, the systemic issues remain. Until there is a significant overhaul of these systems, similar instances of fraud are likely to recur, highlighting the ongoing need for transparency, accountability, and justice.