Sebi looks for possible violations of corporate law in offer Mallya’s parachute lands USL in soup

New Delhi, Feb. 26: United Spirits faces an extensive scrutiny by markets regulator Sebi over its offering `515-crore “golden parachute” to founder Vijay Mallya to quit the board of directors.

The regulator has 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 UKbased Diageo Plc, as also that of Dr Mallya and his group firms that are or have been shareholders in India’s leading liquor maker, a senior official said.

Sebi is scrutinising intricacies of the deal and may soon seek further details from USL, Diageo, Dr Mallya and others.

Besides, the regulator is also looking into the trading data for USL shares to check whether there have 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 between Dr Mallya and Diageo, has raised “serious doubts” about whether the corporate governance norms have been followed in “letter and spirit” in this matter.

A new scrutiny has been launched even as an earlier probe is continuing against Dr Mallya and his UB Group, as also others, 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 taken place because of Mallya deciding to quit as chairman and non-executive director at USL after Diageo agreeing to pay $75 million (over `515 crore) and to absolve him of all liabilities with regard to alleged financial regularities in the past.

Also under the scanner are financial transactions entered into by USL, Dr Mallya and various UB firms with entities abroad, including those before Diageo buying into the company. Some of these deals relate to various sporting ventures floated by Dr Mallya including for cricket and Formula One race. Recently, also he ventured into Caribbean Premier League.