There is more trouble in store for beleaguered beer baron Vijay Mallya as markets regulator Sebi has stepped up its probe into alleged fund diversion from his erstwhile listed group firms to other entities such as Kingfisher Airlines and overseas company Force India Formula One.
With the latest disclosures of an additional fund diversion of Rs 1225.3 crore on Saturday taking the total suspected siphoning of funds from United Spirits alone to over Rs 2,500 crore, Sebi is also referring the matter for further action by other agencies including Serious Fraud Investigation Office (SFIO) and the Enforcement Directorate (ED).
"We have taken note of the latest disclosure by USL and have begun looking into suspected violation of various securities market regulations including those relating to related party transactions, corporate governance and diversion of funds by promoters and top management, a senior official told PTI.
The enforcement directorate (ED) would also come into the picture as the funds are suspected to have been diverted to entities abroad. Necessary assistance would be sought from foreign regulators including in the UK and the US, where his overseas brewery firms and other ventures are based, the official added.
Mallya's close confidants and others who were at senior levels at various listed companies of the group are also under the scanner. Mallya, however, issued a statement denying any wrongdoing as alleged by USL, in which he had sold the controlling stake to UK-based liquor giant Diageo in 2013 in a multibillion dollar deal, and said all the transactions were 'legal and above board'.
Refuting the charges by USL, Mallya said Diageo 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," he added.
Mallya, who has been in UK for months evading an arrest warrant in India while several banks have declared him 'wilful defaulter' for nonpayment 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. However, USL has 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'.
USL Board had ordered an 'additional inquiry' 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 additional inquiry prima facie reveals further instances of actual or potential fund diversions amounting to approximately Rs913.5 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,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, USL said.
The USL Board has directed the management to pursue recovery from the relevant companies and individuals.