USL moves to oust chairman
Published on April 28, 2015 03:07:33 AM
Will discuss bilaterally with Diageo, says Mallya
The directors of United Spirits (USL) had lost confidence in Vijay Mallya continuing in his role as a director and as chairman. Therefore, the board has 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, said USL in a statement on Monday.
"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. 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,” it further said.
Diageo has contractual obligation to support me as a chairman and director on the USL Board
"Diageo (the majority shareholder in the company) has contractual obligations to support Mallya continuing as non-executive director and company chairman of the subject to certain conditions. Therefore, in the event Mallya declines to step down, the board resolved to request Diageo to expeditiously review the position in relation to its contractual obligations and authorised sharing with Diageo a copy of the inquiry report and all the materials relating to the company’s inquiry,” the statement said.
"In respect of the other employees of the company who appear to have been involved in certain transactions covered by the inquiry, the board directed the MD & CEO to initiate necessary internal proceedings in accordance with the applicable rules and policies of the company. The board directed the company's management to continue with the development and strengthening of the robust controls environment that is currently underway to prevent such transactions from occurring in the future,” it added.
The inquiry headed by the MD & CEO of USL revealed that in between 2010-13, funds involved in many transactions were diverted from the company and/or its subsidiaries to United Breweries Holdings (UBHL), particularly Kingfisher Airlines. The diverted amounts were included in the provision made by the company in the financial statements for the year ended March 31, 2014. The inquiry also suggests that the manner, in which certain transactions were conducted, prima facie, indicates various improprieties and legal violations.
Mallya said he will discuss the issue bilaterally with Diageo. "Diageo has contractual obligation to support me as a chairman and director on the USL Board. Today (on Monday), with their statement, they have confirmed it. I will discuss the issue with Diageo bilaterally," Vijay Mallya said. When asked if he will call for a special shareholders' meeting on the issue, he said, "Let us not speculate. Why should I tell anyone about future course of action? I will discuss with Diageo."
Meanwhile USL has appointed Vinod Rao as the head of Finance with effect from April 25 and V Ramachandran as the company secretary and compliance officer of the firm with effect from May 1, 2015.