Controversial businessman Vijay Mallya has resigned as chairman of United Spirits (USL).
Controversial businessman Vijay Mallya has resigned as chairman of United Spirits (USL). In a statement issued late on Thursday evening, Mallya said, “The time has now come for me to move on and end all the publicised allegations and uncertainties about my relationship with Diageo and United Spirits Limited. Accordingly, I am resigning my position with immediate effect. I am pleased to have been able to agree terms with Diageo and United Spirits Limited. The agreement we have reached secures my family legacy.”
Mallya said that he will now be the founder emeritus of USL. “I have agreed a mutual release with both Diageo and United Spirits from claims concerning the alleged irregularities disclosed by USL in April 2015. I am now the founder emeritus of United Spirits which recognises my contribution in building United Spirits to what it is today and evokes great emotions and a degree of extreme satisfaction having steered United Spirits from a sales volume of just under 3 million cases to over 120 million cases when control was passed to Diageo.”
He said that he has also entered into a non-compete arrangement with the company (excluding United Kingdom) for a period of five years.
Separately Diageo said in a statement that the USL board will appoint Mahendra Kumar Sharma as chairman of USL. it said that the financial agreement provides for a payment of $75 million (about £53 million) to Mallya over a five year period. It said the payment will be charged to exceptional items in year ending 30 June 2016.
In 2013 and 2014 Diageo bought a 54.78% stake in USL with Mallya’s consent but since then both sides had been at loggerheads with Diageo seeking to oust him after certain allegations of financial impropriety surfaced against the company when it was under his control. Mallya had maintained that Diageo had a contractual obligation to let him continue as the non-executive chairman of the company.
In April last year, the Diageo-controlled USL board had demanded Mallya’s resignation following a report from PwC that said it had unearthed evidence that USL funds had been improperly diverted to other Mallya companies (the now defunct Kingfisher Airlines) when he controlled the company. The matter is currently under investigation while Mallya has continually denied such allegations.
Mallya had said recently that he was willing to step down if he was offered a “clean break” by Diageo.
“Having recently turned 60, I have decided to spend more time in England, closer to my children,” Mallya said in his statement.
“On the sporting front, I will now be the chief mentor of the Royal Challengers Bangalore. I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy. I am glad that my son, Sidhartha, will remain as a director as he is equally passionate about RCB,” Mallya said in his statement.