Diageo to withhold $35 mn, recover dues from Mallya
Benguluru,July17:There is more trouble ahead for Vijay Mallya as Diageo Plc has decided to withhold the remaining $35 million of the $75 million amount it had agreed to pay the absconding businessman as part of a settlement, the Economic Times reported on Monday. The reasons cited include charges against Mallya for financial misappropriations from United Spirits Limited (USL) and fund diversions.
Instead, according to the report that cited two Diageo executives, the world’s largest liquor company will move to recover dues from Mallya. Diageo, according to the report, is looking to recover the $135 million it had given to Standard Chartered Bank as a conditional guarantee for the liabilities of Watson Ltd, a company affiliated to Mallya. Also, the liquor company is also looking to take over Mallya’s stake in the Force India Formula One team, which had been pledged as security for the aforementioned firm.
As reported earlier, in March 2016, the British liquor major had paid Mallya $40 million (Rs 275 crore under the then prevailing exchange rate) as part of a $75-million (Rs 516 crore) agreement it entered into with the latter on February 25 that year.
“We paid Mallya $40 million immediately as part of the $75-million agreement he signed with our company on February 25, with the balance ($35 million) being payable in equal instalments over five years,” Diageo’s spokesperson had told news agencies.
As part of the sweetheart deal, Mallya resigned as chairman and director of USL and agreed not to compete with Diageo in the liquor business the world over for the next five years and not to interfere in its Indian arm’s business matters.
As reported earlier, soon after the first tranche of the settlement payment was made, in July of 2016, USL said it found evidence of funds diversion worth Rs 1,225 crore from the company when it was managed by Mallya. Subsequently, USL’s owner Diageo filed multiple complaints against Mallya.
ALSO READ: Extradition of Mallya, Lalit likely on agenda as Home Secy visits Britain
USL said the overseas beneficiary or recipients of the diverted funds included entities such as Force India Formula One, Watson Ltd, Continental Administrative Services, Modall Securities Ltd, Ultra Dynamics Ltd and Lombard Wall Corporate Service Inc, in each of which Mallya appeared to have “material, direct and indirect interests”.
With this, Mallya will find himself battling on many fronts. The former liquor baron and airline owner has already been convicted in a contempt case by the Supreme Court. On July 14, the apex court, which had been set to pronounce the quantum of punishment, said the contempt case would proceed once Mallya was produced before it.
ALSO READ: India submits 2,000-page proof against Mallya in UK court
Also on July 14, new agencies reported that the Enforcement Directorate (ED) had charged Mallya with laundering over Rs 1,300 crore through 13 shell companies in the US, Ireland, Mauritius, and France.
The agency made this indictment against Mallya in its charge sheet in the money laundering case involving a loan of about Rs 900 crore from IDBI-KFA bank. The agency also said Mallya has huge property in the US in the name of his daughters — Leana and Tanya.
Further, the ED had registered a criminal case in this matter last year under the Prevention of Money Laundering Act and has attached assets worth over Rs 9,600 crore till now.
Along with the domestic proceedings against Mallya, the government is also attempting to extradite the embattled businessman.
As reported earlier, on July 6, India presented 2,030 pages of what it claimed to be evidence against Mallya at the Westminster Magistrates’ Court in central London to extradite him to India.
Mallya, who is wanted in India for Kingfisher Airlines’ default on loans worth nearly Rs 9,000 crore, has been in the UK since March 2016 and was arrested by Scotland Yard on an extradition warrant on April 18. The first hearing in the extradition case was held on June 13.