Probe reveals Mallya diverted Rs 1,225 cr from USL to his overseas, Indian firms | business-news | Hindustan Times
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Probe reveals Mallya diverted Rs 1,225 cr from USL to his overseas, Indian firms

A fresh inquiry by independent experts found that liquor baron Vijay Mallya had diverted funds amounting to Rs 1,225.3 crore to his overseas and Indian firms, including Kingfisher Airlines, from United Spirits Ltd (USL) when he was its non-executive chairman

business Updated: Jul 10, 2016 10:14 IST
File photo of liquor baron Vijay Mallya.  An inquiry has found that Mallya diverted funds from USL amounting to over Rs 12 crore to his overseas and Indian companies between 2010 and 2014.
File photo of liquor baron Vijay Mallya. An inquiry has found that Mallya diverted funds from USL amounting to over Rs 12 crore to his overseas and Indian companies between 2010 and 2014. (REUTERS)

A fresh inquiry by independent experts found that liquor baron Vijay Mallya had diverted funds amounting to Rs 1,225.3 crore to his overseas and Indian firms, including Kingfisher Airlines, from United Spirits Ltd (USL) when he was its non-executive chairman, the company said on Saturday.

The company, acquired by the British liquor giant from Mallya’s UB Group in 2013 in a multi-billion dollar deal, made it clear that the earlier settlement reached with the Indian businessman would not absolve him of the claims arising out of the latest findings of an internal ‘Additional Inquiry’.

Mallya, who has been in UK for months evading an arrest warrant in India while several banks have declared him ‘wilful defaulter’ for non-payment of dues worth over Rs 9,000 crore by his now-defunct Kingfisher, had struck a settlement with USL in February. Under the ‘sweetheart deal’, he was promised an over Rs 500-crore payout to leave the company and was also absolved of any ‘personal liability’ at that time.

At a meeting on Saturday, USL Board discussed findings of the ‘additional inquiry’ it had ordered to plug gaps found in an initial probe launched in April 2015 that showed improprieties in loans worth Rs 1,337 crore given by USL to the entities linked to its erstwhile promoters, the Mallya-led UB Group.

“The additional inquiry prima facie reveals further instances of actual or potential fund diversions amounting to approximately Rs 913.5 crore (using exchange rate as on March 31, 2015) as well as other potentially improper transaction involved USL and its Indian and overseas subsidiaries amounting approximately Rs 311.8 crore,” USL said in a BSE filing.

The transactions occurred during the review period covered by the additional inquiry -- from October 2010 to July 2014 -- although certain transactions appear to have been initiated in years prior to the review period, it added.

“These improper transactions identified in the additional inquiry involved, in most cases, the diversion of fund to overseas and Indian entities that appear to be affiliated or associated with USL’s former non-executive Chairman, Dr Vijay Mallya,” the USL filing said.

The company said its mutual release agreement with Mallya in February this year, under which Diageo agreed to pay him $75 million dollars, will not cover the matters arising out of the ‘additional inquiry’.

While the matter is already being probed by markets regulator Sebi and corporate affairs ministry among others, the latest findings of the internal probe are also being reported to the concerned regulators for any further action.

There were no immediate comments from Mallya.

USL said the overseas beneficiary or recipients of the diverted funds include entities such as Force India Formula One, Watson Ltd, Continental Administrative Services, Modall Securities Ltd, Ultra Dynamics Ltd and Lombard Wall Corporate Service Inc “in each of which Dr Mallya appears to have a material, direct and indirect interests”.

The Indian beneficiaries or recipients of the funds identified by the additional inquiry included, in most cases, Kingfisher Airlines (KFA), USL said.