Engaged in a boardroom battle with its Chairman Vijay Mallya, United Spirits has refused to share with the BSE its inquiry report on alleged fund diversion to UB Group firms, after rejecting a similar demand from another stock exchange NSE to make the report public.
In a reply identical to the one sent to the NSE yesterday, Diageo-owned United Spirits Ltd (USL) has now told the BSE that it is “not in a position to make the internal report available to the BSE for onwards public dissemination” for various reasons including its confidentiality.
The BSE had sought clarification from USL with respect to its disclosure dated April 25 about the company having “lost confidence” in Mallya and he being asked to quit as Chairman and Director in the wake of alleged fund transfer to certain companies of his UB Group, including Kingfisher Airlines.
Mallya outright rejected the demand and denied all the allegations, while adding that only shareholders have the right to seek his removal and the majority owner Diageo had “certain contractual obligations” to support his position.
The matter is already being looked into by several agencies, including markets watchdog Sebi and the stock exchanges, which act as front-end regulators.
Taking forward their probe into the matter, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) had sought details from USL on its internal inquiry.
The company’s refusal to share details sought by the two exchanges has come as a fresh twist in the boardroom battle at USL, where UK-based Diageo holds nearly 55 per cent stake, while Mallya’s UB Group continues to own nearly 4 per cent.
The company was also asked to clarify on any submissions made by it to the Central Government or other authorities in connection with this matter.
USL said that “the internal report contains sensitive commercial and operational information concerning the company and transactions and dealings involving various parties, and is confidential to the company.
A public disclosure of the internal report would provide the company’s competitors and other third parties with vested interests an access to such sensitive commercial and operational information of the company, and thereby provide an opportunity for such parties to use such information in a manner that is prejudicial to the interests of the company and its shareholders.
– United Spirits
It further said that the inquiry suggested that the manner in which certain transactions were conducted, prima facie, indicated various improprieties and legal violations.
While USL’s board was not in a position to determine the roles of any individuals involved, the company was asked to report such transactions to the relevant authorities.
“A public disclosure of the internal report would potentially prejudice, and interfere with, the investigations by the relevant authorities and could also potentially lead to misuse of the evidence contained in the internal report.
“Such a consequence would be detrimental to the interests of not only the company and its shareholders, but also of the public at large, in ensuring a fair and proper investigation,” it added.
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