Mallya refutes USL's allegations on fund diversion

A day after United Spirits disclosed Rs 1,225 crore fund diversion by the erstwhile promoters to entities linked to Vijay Mallya, the embattled businessman today said all transactions were "legal and above board" and the company was now making "unfounded allegations".
He said that Diageo, to whom Mallya-led UB Group had sold majority control in United Spirits Ltd (USL) in 2013, had conducted an extensive due diligence before buying the shares and it was "surprising and unfortunate" that these allegations were being made now.
"I have absolutely no knowledge about this purported enquiry by E+Y nor the suggested allegations. Surprisingly neither USL nor E+Y have given me any details of the allegations or any opportunity to respond," Mallya said in an emailed statement sent though his public relations manager.

"I can only reiterate that all 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," he said.
In a stock exchange filing yesterday, USL had disclosed fund diversion and improper transactions worth Rs 1,225.3 crore involving entities linked to Mallya, including Kingfisher Airlines and his Formula One team.
The company also 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 the 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.
As per USL's statement, its Board yesterday 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 Mallya.

"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.
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.
USL said it will be reporting the findings of its additional inquiry spearheaded by its Managing Director and CEO Anand Kripalu to concerned authorities for further action.

An USL spokesperson said the findings of the additional inquiry relate to "historical matters before Diageo consolidated the USL business in July 2014" and ruled out any further financial burden to the company.
Mallya is currently wanted in India and is facing charges of money laundering.
Last month the Enforcement Directorate had attached assets worth Rs 1,411 crore belonging to Mallya and one of his companies in connection with its money laundering probe in the the alleged IDBI bank loan default case.
His passport has been revoked by the Indian government. He has been indicating against any imminent return to India in the wake of various legal and regulatory troubles.