This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
Diageo ‘demands’ Mallya pay back £28 million severance
Diageo is “demanding” that former United Spirits chairman Vijay Mallya refunds £28 million (US$40 million) paid to him in severance due to alleged “breaches” committed by the Indian tycoon.
The protracted battle between Diageo and Vijay Mallya continues
UK drinks group Diageo agreed to pay Mallya a total US$75 million severance package in February last year to “bring to an end the uncertainty relating to the governance of USL”. The firm acquired a majority stake in India’s USL in 2014.
Under the agreement, Mallya immediately received US$40m, and was due to receive the remaining balance paid in equal instalments of US$7m over five years.
However, due to “breaches of several provisions of the 25 February Agreement”, Diageo withheld the first US$7m payment, which was due to be paid to Mallya in February this year. The group further claims in its latest financial results documents that it is “very unlikely to become liable to pay future instalments” to Mallya, and has “demanded from Dr Mallya the repayment of US$40m”.
Diageo is also seeking compensation from Mallya for alleged “losses” incurred by “breaches committed by him”.
The action follows an ‘additional inquiry’ into alleged “improper transactions” at USL. The investigation, which follows an ‘initial inquiry’ in 2014, discovered “fund diversions” of a further £102m (US$134m) and “potentially improper transactions” amounting to £35m (US$46m).
The inquiry states that these transactions largely occurred between 2010 and 2014, and involved the “diversion of funds” to Indian and non-Indian entities in which Mallya has an interest, including his grounded Kingfisher Airlines and racing team Force India Formula One.
USL is now examining each alleged fund diversion identified in the additional inquiry and has “filed civil suits for recovery of funds from certain parties, including Dr Mallya, before the relevant courts”.
Following the initial inquiry, Diageo and Mallya agreed a “mutual release”, with both parties agreeing not to take legal action against each other. However, such terms do not apply to the additional inquiry.