New Delhi:In mounting troubles for Vijay Mallya, regulator Sebi on Friday barred him from the securities market for another three years as also from holding directorship in listed companies for five years in the case of illegal fund diversions at United Spirits Ltd.
Besides, the watchdog has imposed a one-year ban on the company’s former managing director Ashok Capoor and its former CFO P.A. Murali.
Through an interim order in January 2017, the regulator had barred Mallya and six former officials of United Spirits, including Capoor and Murali, from the securities markets in the case related to illegal fund diversions.
In a 38-page order, Sebi said it has banned Mallya for three years from the securities market. He has also been barred from “holding position as director or key managerial person of a listed company for a period of five years", it added.
Mallya had resigned as chairman and non-executive director of United Spirits Ltd (USL) in February 2016 after the deal with Diageo.
The embattled liquor tycoon is facing an extradition trial in a UK court over fraud and money laundering charges by Indian authorities.
Capoor and Murali have been restrained from holding directorship or key managerial positions for one year. However, Sebi has revoked ban on four other former officials—S.N. Prasad, Paramjit Singh Gill, Ainapur S.R. and Sowmiyanarayanan.
“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..," Sebi whole time member G. Mahalingam said in the order.
According to PwC report, there was a total diversion of Rs655.55 crore from USL to the companies of UB Group. Sebi noted that Mallya exerted pressure on the employees of USL to provide funds to UB Group entities directly and indirectly.
“The diversion of funds from USL adversely affected the balance sheet of USL. Further, the diversion of funds to UB Group entities in the guise of advances to TMU (Tie-up Manufacturing Units)... Resulted in misleading information being published in books of accounts of USL," the order noted.
Though the statutory auditors as well as the shareholders of USL believed that the advances were genuine, Sebi said that Mallya, Capoor and Murali were “well aware of the fact that these transfers were, in reality, not advances, in the normal course of business". By indulging in such activities, they violated the provision of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.