Vijay Mallya’s Rs 515 crore ‘sweetheart deal’ faces Sebi scrutiny

Brand-new DELHI: Vijay Mallya’s Rs 515-crore ‘golden parachute’ to exit United Spirits faces an extensive scrutiny by markets regulator Sebi, which has actually begun looking into possible violations of corporate governance and other norms because of this deal.

Sebi is looking into the role of United Spirits and its main promoter UK-based Diageo Plc, as also that of Mallya and his group firms that are or have actually been shareholders in India’s leading liquor maker, a senior official said.

Sebi is scrutinizing intricacies of the deal and may soon seek further details from USL, Diageo, Mallya and others. Besides, the regulator is also looking into the trading data for USL shares to check whether there have actually been any violation of insider trading norms or other irregularities.

He further said that the corporate affairs ministry and other agencies may also join in as the deal, struck on Thursday between Mallya and Diageo, has actually raised “serious doubts” about whether the corporate governance norms have actually been followed in “letter and spirit” in this matter.

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A Brand-new scrutiny has actually been launched even as an earlier probe is continuing versus Mallya and his UB Group, as also others, along with regard to alleged financial irregularities at United Spirits Ltd (USL) relating to loans advanced to UB firms including for long-defunct Kingfisher Airlines.

Besides, various UB Group firms are already facing probes by Sebi relating to listing rule violations, while corporate affairs ministry is also looking into alleged violations of certain provisions of the Companies Act. The role of previous auditors is also under the scanner.

The corporate affairs ministry may also look at the fresh developments that have actually taken place because of Mallya deciding to quit as Chairman and Non-Executive Director at USL after Diageo agreeing to pay $75 million (over Rs 515 crore) and to absolve him of all liabilities along with regard to alleged financial regularities in the past.
Also under the scanner are financial transactions entered into by USL, Mallya and various UB Group firms along with entities abroad, including those before Diageo buying into the company. Some of these deals relate to various sporting ventures floated by Mallya including for cricket and Formula One race. Recently, also he ventured into Caribbean Premier League.
Mallya, who has actually been known for his flamboyance and used to be referred to as ‘King of Good Times’ before his empire ran into troubles beginning along with collapse of Kingfisher Airlines, managed a good deal on Thursay to end a year-long boardroom battle at USL, wherein he had sold controlling stake to Diageo in a multi-billion dollar deal.
Such an exit arrangement is commonly known in the business parlance as ‘golden parachute’ or ‘sweetheart deal’.
Mallya, who along along with his group firms is fighting ‘wilful defaulter’ tags given by various lenders in relation to loans taken by long-defunct Kingfisher Airlines, said he would certainly now “spend more time in England” closer to his children.

Contacts:
Posted by: philco on