INSUBCONTINENT EXCLUSIVE:
MUMBAI: The Securities and Exchange Board of India (SEBI) has barred Vijay Mallya from accessing the securities market for three years and
holding any position as director or key managerial person of a listed company for five years for his involvement in fraud.
The ban starts
from the date of the order, the regulator said on Friday.
SEBI has also barred Ashok Capoor, former managing director of United Spirits
(USL), and P.A Murali, former executive director and chief financial officer of USL, for a period of one year each
Both former senior officials at USL have also been restrained from holding directorships and key managerial positions for one year in any
listed company.
"In the context of diversion of funds perpetrated in a listed company by way of dubious and concealed financial
statements/projections or false books of accounts, it is inevitable that SEBI should step in and take appropriate action against the
entities responsible for such misdeeds to maintain the integrity of the securities market as well as to protect the interests of the
investors in the securities market," SEBI whole-time member G Mahalingam said in his order.
The regulator said the modus operandi of fund
diversion was as follows: USL first gave trade receivables and advances to distributors and project related entities
These advances were disclosed as amounts provided for working capital requirement, enhancement of capacities, and lease deposits in the
books of accounts of United Spirits.
These funds were then transferred to UB Group companies under instructions from Mallya and other key
The distributors and project related entities (PRE) of United Spirits refused to return the advances to USL stating the reason that the
funds were due from the UB Group companies to whom they had forwarded the funds at the behest of Mallya.
"Further, the distributors and PRE
of United Spirits refused to return the said amounts until such time they receive the funds due from the UB Group companies," Sebi said.
In
its report, PWC-UK stated that one of the distributors, Wave, said Mallya and Ashok Capoor permitted it to withhold payments due to USL
until such time it collects funds from the UB Group companies.
"I note from records that out of Rs 655.55 crores allegedly diverted from
USL, an amount of Rs 224.08 crores was owed to USL by Wave Industries (Wave), as trade receivables from distributors
same indicates that the trade receivables of USL from distributors were indirectly being used to fund the companies of the UB Group,"
Mahalingam said in the order.
