Mallya’s Diageo pay-off frozen as pressure mounts

Drinks baron Vijay Mallya’s £53 million severance package from Diageo has been frozen, while India’s financial conduct watchdog has named him as part of a money laundering investigation.

Vijay Mallya (Photo: Wiki)

India’s Debt Recovery Tribunal has ruled in favour of the country’s largest lender, the State Bank of India, after it called for “first right” to Mallya’s pay-off package from alcohol giant Diageo.

The temporary freeze will be in place until the dispute with his lenders is resolved, the tribunal said.

The bank is leading a consortium of lenders that are seeking redress for substantial loans to the businessman on which he has defaulted.

On Friday (4 March), it went before the DRT seeking Mallya’s arrest and the confiscation of his passport, saying that he risked absconding without paying off his debts.

It is thought that Mallya could owe over £800 million to creditors who lent him money as he tried to keep his doomed Kingfisher airline business flying.

Meanwhile, India’s Enforcement Directorate has filed a money laundering case against Mallya and six other former executives from his failed Kingfisher Airlines business.

The exact details of the case being made against Mallya have not yet been made public. However, it is thought to be related to an ongoing fraud investigation being carried out by India’s Central Bureau of intelligence.

In February, Mallya announced he was stepping down as the chairman of United Spirits (USL), the Diageo-owned drinks producer, after securing a £53 million pay-off deal.

At the time, he said he was planning to spend more time with his family in the UK.

Responding to developments since he announced his stepping-down from USL, Mallya said on Sunday (6 March): “I have been most pained as being painted as an absconder – I have neither the intention nor any reason to abscond.

“I have been a non-resident for almost 28 years and the Bank of India has acknowledged this in writing.”