Mallya sold the controlling stock in his United Spirits, and has now received a golden parachute severance to walk away
Mallya sold the controlling stock in his United Spirits, and has now received a golden parachute severance to walk away
(DIYA TV) — Vijay Mallya announced Thursday he will relinquish his post as chairman of United Spirits after the company’s new owner offered to compensate him Rs 515 crore ($75 million U.S.) for the departure, as well as absolve him of all liabilities over scrutinized fiscal issues at the company founded by his family. The deal now has the spotlight, the Securities and Exchange Board of India (Sebi) has begun looking into possible violations in corporate governance because of the severance.
Specifically, Sebi is investigating the business practices of United Spirits, its main promoter, UK-based Diageo Plc., Mallya himself, and group firms that are currently or have been investors in India’s leading liquor provider. The vast intricacies of Mallya’s severance have led Sebi to scrutinize its mechanics, and could soon begin questioning USL, Diageo, Mallya and others. Additionally, regulators are taking a closer look at USL shares to make sure there have been no violations of insider trading and other irregularities.
Anonymous sources inside Sebi have revealed that the corporate affairs ministry and additional agencies may begin independent investigations after the deal struck between Mallya and United Spirits raised “serious doubts” about whether the corporate governance norms have been followed in “letter and spirit” in this matter.
When it rains, it pours
Mallya hasn’t caught many breaks lately — the latest news comes in addition to an earlier probe which alleged financial regularities relating to loans advanced to his group, UB Firms, including for the long-defunct Kingfisher Airlines. Sebi has already charged the same group with rule violations, and the corporate ministry is investigating alleged violations of provisions of the Companies Act.
Sahara Force India, a Formula 1 racing team created by a consortium of businessmen, led by Mallya
Even more, several financial transactions which United Spirits, Mallya and various UB Group firms with entities abroad, including those before Diageo buying into the company, are under heavy scrutiny. Some of the aforementioned deals resulted in Mallya’s venture into the world of professional sport like cricket, Formula One, and most recently his embarkment into the Caribbean Premiere League.
Flash and Pizazz
Forever regarded as the flamboyant type, Mallya has been referred to on countless occasions as the “King of Good Times,” until his empire ran into a wall, beginning with the collapse of Kingfisher Airlines. Mallya’s multi-billion dollar sale of his controlling stock to Diageo, and the severance deal he struck, brings to an end the year-long battle he has been in with USL.
