New Delhi: Alleging fund diversion to Kingfisher and other UB or United Breweries group entities, Diageo-owned United Spirits on Saturday asked its erstwhile promoter and current chairman Vijay Mallya to quit the board - even as the liquor baron outright rejected the demand and the charge.
The board of United Spirits Limited (USL), in which Diageo has bought a controlling 55 per cent stake for about $3 billion, asked Mr Mallya to step down after "various improprieties and legal violations" were found in a probe into loans worth Rs 1,337 crore given by USL to UB Group firms.
USL, the erstwhile flagship firm of the UB Group, has already seen a number of exits from its board and top management since the probe was launched by Diageo.
The UK-based liquor giant had first acquired 25 per cent in USL from Mr Mallya-led UB Group in late 2012, while it bought a further 26 per cent stake from non-promoters last year.
USL said that its board took the decision for ouster of Mr Mallya following an "inquiry" report submitted by its MD and CEO, which revealed that between 2010 and 2013, funds involved in many transactions were diverted from the company and/or its subsidiaries to certain UB Group companies, including Kingfisher Airlines Ltd in particular.
The company further said that "in the event Mallya declines to step down, the Board also resolved that it would recommend to the shareholders of the company, the removal of Mallya as a director and as the Chairman of the Board".
USL said it would also initiate necessary steps for recovery of the diverted funds while the role of individuals would be determined by the authorities concerned to whom the company will report all transactions. Internal action would be taken against other employees found to be involved in the matter.
Mr Mallya has been in the dock ever since his ambitious airline venture Kingfisher landed in financial troubles and got eventually grounded in October 2012.
Thereafter, Mr Mallya had to sell some of his assets, including the controlling stake in USL to Diageo.
In September last year, the board of United Spirits ordered a probe into the loans given to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.
Mr Mallya, who is already battling a number of cases against banks over a 'wilful defaulter' tag related to loan defaults by Kingfisher, refused to resign and said the inferences and allegations are unjustified and false. He said he did not intend to resign as a USL director and would pursue the contractual obligations with Diageo.
He said the USL board has "parroted" the report submitted by PwC, whose finding itself was based on "half-truths and twisted facts against the previous management".
PwC, which was asked by Diageo to conduct a forensic inquiry into the matter, said in a statement it has done its work with "the highest professional standards".
United Spirits' board said: "The inquiry prima facie revealed that between 2010 and July 2013, certain transactions entered into on behalf of the company appear to have been undertaken to show a lower exposure of the company (and its subsidiaries) to United Breweries Holdings (UBHL) than that which actually existed at the relevant time, that is prior to July 2013."
"All of the dues owing to the Company and its subsidiaries from UBHL aggregating Rs 1,337 crores on July 3, 2013, were consolidated into a single loan agreement dated 3 July 2013 entered into between the Company and UBHL," it added.
The inquiry also suggests that the manner in which certain transactions were conducted, prima facie, indicates various "improprieties and legal violations".
Reacting to the charges, Mr Mallya said that prior to acquiring control of USL, Diageo conducted an extensive due diligence exercise at USL over 4 months in the course of which details of all transactions were disclosed to them.
The board said it is not in a position to make any final determinations with regard to the roles of any individual involved and it has directed that the company "report such transactions to the authorities as required under applicable law".
Further, pursuant to the USL board directions, "a copy of the inquiry report, including the inputs and expert advice of the independent advisers and specialists, as well as the communications received from concerned directors are being provided to the company's auditors".
"In connection with the recovery of the company's funds that were diverted from the company, the Board passed a resolution that the company should take the necessary steps to pursue all rights and claims against, and expeditiously recover its dues from, the relevant parties to the extent possible," the report further said.
"In light of the above, and without making any determination as to fault or culpability, the directors noted that they had lost confidence in Vijay Mallya continuing in his role as a director and as chairman and therefore, the Board called upon Mallya to resign forthwith as a director and as the Chairman of the Board and step down from his positions in the company's subsidiaries," it noted.
Mr Mallya said the decision of the USL board was based on a report of PwC while the Diageo-appointed managing director of USL has prepared his inquiry report "parroting the PwC report".
"The PwC report essentially deals with past transactions entered into by USL between 2010 to 2012 which have been duly reflected in the audited accounts of USL without qualification and in full compliance of law at the relevant time, and duly approved by the then directors of USL and its shareholders."
He further said: "PwC made no effort to contact the then USL Board members or auditors to verify the position and seek clarity. In addition, the current Board of USL consists of directors appointed at the behest of Diageo and who have absolutely no knowledge of the past."
"The PwC Report is based on half-truths and twisted facts against the previous Management and a robust challenge to the report will be submitted. The inferences and allegations are unjustified and false and we were deprived of the opportunity to place correct and complete facts before the new Board of USL," Mr Mallya further said.
New Delhi: Alleging fund diversion to Kingfisher and other UB or United Breweries group entities, Diageo-owned United Spirits on Saturday asked its erstwhile promoter and current chairman Vijay Mallya to quit the board - even as the liquor baron outright rejected the demand and the charge.
The board of United Spirits Limited (USL), in which Diageo has bought a controlling 55 per cent stake for about $3 billion, asked Mr Mallya to step down after "various improprieties and legal violations" were found in a probe into loans worth Rs 1,337 crore given by USL to UB Group firms.
USL, the erstwhile flagship firm of the UB Group, has already seen a number of exits from its board and top management since the probe was launched by Diageo.
The UK-based liquor giant had first acquired 25 per cent in USL from Mr Mallya-led UB Group in late 2012, while it bought a further 26 per cent stake from non-promoters last year.
USL said that its board took the decision for ouster of Mr Mallya following an "inquiry" report submitted by its MD and CEO, which revealed that between 2010 and 2013, funds involved in many transactions were diverted from the company and/or its subsidiaries to certain UB Group companies, including Kingfisher Airlines Ltd in particular.
The company further said that "in the event Mallya declines to step down, the Board also resolved that it would recommend to the shareholders of the company, the removal of Mallya as a director and as the Chairman of the Board".
USL said it would also initiate necessary steps for recovery of the diverted funds while the role of individuals would be determined by the authorities concerned to whom the company will report all transactions. Internal action would be taken against other employees found to be involved in the matter.
Mr Mallya has been in the dock ever since his ambitious airline venture Kingfisher landed in financial troubles and got eventually grounded in October 2012.
Thereafter, Mr Mallya had to sell some of his assets, including the controlling stake in USL to Diageo.
In September last year, the board of United Spirits ordered a probe into the loans given to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.
Mr Mallya, who is already battling a number of cases against banks over a 'wilful defaulter' tag related to loan defaults by Kingfisher, refused to resign and said the inferences and allegations are unjustified and false. He said he did not intend to resign as a USL director and would pursue the contractual obligations with Diageo.
He said the USL board has "parroted" the report submitted by PwC, whose finding itself was based on "half-truths and twisted facts against the previous management".
PwC, which was asked by Diageo to conduct a forensic inquiry into the matter, said in a statement it has done its work with "the highest professional standards".
United Spirits' board said: "The inquiry prima facie revealed that between 2010 and July 2013, certain transactions entered into on behalf of the company appear to have been undertaken to show a lower exposure of the company (and its subsidiaries) to United Breweries Holdings (UBHL) than that which actually existed at the relevant time, that is prior to July 2013."
"All of the dues owing to the Company and its subsidiaries from UBHL aggregating Rs 1,337 crores on July 3, 2013, were consolidated into a single loan agreement dated 3 July 2013 entered into between the Company and UBHL," it added.
The inquiry also suggests that the manner in which certain transactions were conducted, prima facie, indicates various "improprieties and legal violations".
Reacting to the charges, Mr Mallya said that prior to acquiring control of USL, Diageo conducted an extensive due diligence exercise at USL over 4 months in the course of which details of all transactions were disclosed to them.
The board said it is not in a position to make any final determinations with regard to the roles of any individual involved and it has directed that the company "report such transactions to the authorities as required under applicable law".
Further, pursuant to the USL board directions, "a copy of the inquiry report, including the inputs and expert advice of the independent advisers and specialists, as well as the communications received from concerned directors are being provided to the company's auditors".
"In connection with the recovery of the company's funds that were diverted from the company, the Board passed a resolution that the company should take the necessary steps to pursue all rights and claims against, and expeditiously recover its dues from, the relevant parties to the extent possible," the report further said.
"In light of the above, and without making any determination as to fault or culpability, the directors noted that they had lost confidence in Vijay Mallya continuing in his role as a director and as chairman and therefore, the Board called upon Mallya to resign forthwith as a director and as the Chairman of the Board and step down from his positions in the company's subsidiaries," it noted.
Mr Mallya said the decision of the USL board was based on a report of PwC while the Diageo-appointed managing director of USL has prepared his inquiry report "parroting the PwC report".
"The PwC report essentially deals with past transactions entered into by USL between 2010 to 2012 which have been duly reflected in the audited accounts of USL without qualification and in full compliance of law at the relevant time, and duly approved by the then directors of USL and its shareholders."
He further said: "PwC made no effort to contact the then USL Board members or auditors to verify the position and seek clarity. In addition, the current Board of USL consists of directors appointed at the behest of Diageo and who have absolutely no knowledge of the past."
"The PwC Report is based on half-truths and twisted facts against the previous Management and a robust challenge to the report will be submitted. The inferences and allegations are unjustified and false and we were deprived of the opportunity to place correct and complete facts before the new Board of USL," Mr Mallya further said.
New Delhi: Alleging fund diversion to Kingfisher and other UB or United Breweries group entities, Diageo-owned United Spirits on Saturday asked its erstwhile promoter and current chairman Vijay Mallya to quit the board - even as the liquor baron outright rejected the demand and the charge.
The board of United Spirits Limited (USL), in which Diageo has bought a controlling 55 per cent stake for about $3 billion, asked Mr Mallya to step down after "various improprieties and legal violations" were found in a probe into loans worth Rs 1,337 crore given by USL to UB Group firms.
USL, the erstwhile flagship firm of the UB Group, has already seen a number of exits from its board and top management since the probe was launched by Diageo.
The UK-based liquor giant had first acquired 25 per cent in USL from Mr Mallya-led UB Group in late 2012, while it bought a further 26 per cent stake from non-promoters last year.
USL said that its board took the decision for ouster of Mr Mallya following an "inquiry" report submitted by its MD and CEO, which revealed that between 2010 and 2013, funds involved in many transactions were diverted from the company and/or its subsidiaries to certain UB Group companies, including Kingfisher Airlines Ltd in particular.
The company further said that "in the event Mallya declines to step down, the Board also resolved that it would recommend to the shareholders of the company, the removal of Mallya as a director and as the Chairman of the Board".
USL said it would also initiate necessary steps for recovery of the diverted funds while the role of individuals would be determined by the authorities concerned to whom the company will report all transactions. Internal action would be taken against other employees found to be involved in the matter.
Mr Mallya has been in the dock ever since his ambitious airline venture Kingfisher landed in financial troubles and got eventually grounded in October 2012.
Thereafter, Mr Mallya had to sell some of his assets, including the controlling stake in USL to Diageo.
In September last year, the board of United Spirits ordered a probe into the loans given to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.
Mr Mallya, who is already battling a number of cases against banks over a 'wilful defaulter' tag related to loan defaults by Kingfisher, refused to resign and said the inferences and allegations are unjustified and false. He said he did not intend to resign as a USL director and would pursue the contractual obligations with Diageo.
He said the USL board has "parroted" the report submitted by PwC, whose finding itself was based on "half-truths and twisted facts against the previous management".
PwC, which was asked by Diageo to conduct a forensic inquiry into the matter, said in a statement it has done its work with "the highest professional standards".
United Spirits' board said: "The inquiry prima facie revealed that between 2010 and July 2013, certain transactions entered into on behalf of the company appear to have been undertaken to show a lower exposure of the company (and its subsidiaries) to United Breweries Holdings (UBHL) than that which actually existed at the relevant time, that is prior to July 2013."
"All of the dues owing to the Company and its subsidiaries from UBHL aggregating Rs 1,337 crores on July 3, 2013, were consolidated into a single loan agreement dated 3 July 2013 entered into between the Company and UBHL," it added.
The inquiry also suggests that the manner in which certain transactions were conducted, prima facie, indicates various "improprieties and legal violations".
Reacting to the charges, Mr Mallya said that prior to acquiring control of USL, Diageo conducted an extensive due diligence exercise at USL over 4 months in the course of which details of all transactions were disclosed to them.
The board said it is not in a position to make any final determinations with regard to the roles of any individual involved and it has directed that the company "report such transactions to the authorities as required under applicable law".
Further, pursuant to the USL board directions, "a copy of the inquiry report, including the inputs and expert advice of the independent advisers and specialists, as well as the communications received from concerned directors are being provided to the company's auditors".
"In connection with the recovery of the company's funds that were diverted from the company, the Board passed a resolution that the company should take the necessary steps to pursue all rights and claims against, and expeditiously recover its dues from, the relevant parties to the extent possible," the report further said.
"In light of the above, and without making any determination as to fault or culpability, the directors noted that they had lost confidence in Vijay Mallya continuing in his role as a director and as chairman and therefore, the Board called upon Mallya to resign forthwith as a director and as the Chairman of the Board and step down from his positions in the company's subsidiaries," it noted.
Mr Mallya said the decision of the USL board was based on a report of PwC while the Diageo-appointed managing director of USL has prepared his inquiry report "parroting the PwC report".
"The PwC report essentially deals with past transactions entered into by USL between 2010 to 2012 which have been duly reflected in the audited accounts of USL without qualification and in full compliance of law at the relevant time, and duly approved by the then directors of USL and its shareholders."
He further said: "PwC made no effort to contact the then USL Board members or auditors to verify the position and seek clarity. In addition, the current Board of USL consists of directors appointed at the behest of Diageo and who have absolutely no knowledge of the past."
"The PwC Report is based on half-truths and twisted facts against the previous Management and a robust challenge to the report will be submitted. The inferences and allegations are unjustified and false and we were deprived of the opportunity to place correct and complete facts before the new Board of USL," Mr Mallya further said.
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