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#Ouster: Britain’s Diageo demands resignation of Vijay Mallya from United Spirits

British drinks giant Diageo has asked Vijay Mallya, chairman of the company’s Indian associate, to step down after an independent inquiry found “various improprieties and legal violations” at the company.

In 2014 Diageo became the majority stakeholder in United Spirits Limited (USL), part of Mallya’s UB Group which also owned the doomed Kingfisher Airlines.

Under the deal, Mallya was retained as a director and chairman of the company.

Now, Diageo – which owns world-famous brands such as Johnny Walker whiskey and Smirnoff Vodka – have asked Mallya to step down from both positions, a request that the flamboyant tycoon has rejected outright.

Diageo launched an investigation last year into what it called “various improprieties” after it became USL’s majority stakeholder in July.  The investigation has reportedly found that USL diverted funds to various other UB Group companies, including Kingfisher Airlines. 

A Diageo statement said that the funds were diverted between 2010 and 2013 to various UB Group companies, in particular Kingfisher Airlines Ltd at a time when Mallya was battling to prop up the company.  Kingfisher Airlines eventually went bust in October 2012 with debts running into hundreds of millions of pounds. 

Diageo has now appointed Price Waterhouse Coopers to conduct a “forensic” inquiry into the fund transfers and said it would recommend the removal of Mallya as chairman and director of USL if he declines to step down.

The original investigation by Diageo was prompted by massive losses at USL in the 2013/14 financial year.

Mallya has responded angrily to Diageo’s charges, saying that the British firm had carried out “extensive” due diligence before taking a controlling stake in USL.

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