Former liquor baron Vijay Mallya on Sunday denied fresh allegations of diversion of funds during his tenure as the Chairman of United Spirits Ltd (USL).
Diageo-owned United Spirits, in a weekend statement to the stock exchanges, said an additional internal probe had revealed that Mallya had diverted funds worth ₹1,225.30 crore to Indian and overseas companies associated with him.
“I have absolutely no knowledge about this purported enquiry by EY nor the suggested allegations. Surprisingly, neither USL nor EY have given me any details of the allegations or any opportunity to respond,” Mallya said in a statement today.
He added that all the transactions were legal, above board and approved by USL auditors, the USL board and shareholders.
“Over and above this Diageo conducted an extensive due diligence on USL prior to acquiring shares. It is surprising and unfortunate that unfounded allegations are now being made without any reference to me whatsoever,” said Mallya, who is currently in London.
Fraud conviction The new allegations, if proved, can result in Mallya being convicted of fraud though USL said only a court or the regulatory authority would be in a position to determine his fault or culpability. The board had earlier asked Mallya to step down as USL Chairman after it was found that funds had been “improperly advanced” from the company to other entities connected with him, between 2010 and 2012.
In February, Diageo had agreed to pay Mallya $75 million in lieu of his resignation, as well as relinquishing all his rights in the company. The London-based liquor major had paid Mallya $40 million immediately after he resigned.
A spokesperson for the liquor giant said that agreement did not release Mallya from any claims arising out of the additional inquiry. The additional probe reveals fund diversions between October 2010 and July 2014. This could put the entire settlement deal worth $75 million under a cloud.
The company’s board said the probe had revealed further instances of actual or potential fund diversions amounting to ₹913.5 crore as well as other potentially improper transactions involving USL and its Indian and overseas subsidiaries amounting to around ₹ 311.8 crore.
USL should conduct a detailed review of each case of fund diversion, the board said, adding that it has directed the MD & CEO of the company to take action against the employee concerned to recover the funds.
The overseas beneficiaries of these funds, according to the report, include Force India Formula One, Watson Ltd, Continental Administrative Services, Modali Securities Ltd, Ultra Dynamix Ltd and Lombard Wall Corporate Services Inc. In each of these Mallya appeared to have a material, direct or indirect interest.
The Indian beneficiaries of the funds identified by the additional inquiry included, in most cases, Kingfisher Airlines.
The spokesperson said based on the board’s understanding as of today, “we believe there will be no further material financial implications to USL.”
The new development puts Mallya in deeper trouble. A Mumbai court recently declared him a proclaimed offender, involved in money laundering in a ₹900-crore loan default case.