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No More United in Spirits?

Published on Thu, Apr 30,2015 | 08:20, Updated at Thu, Apr 30 at 08:20Source : Moneycontrol.com 

Based on the latest developments at USL, corporate governance advisory firm SES has raised several questions regarding the financial improprieties, the role of Vijay Mallya, his management team and auditors and the current responsibilities on Diageo…

‘First question that Diageo needs to answer is whether they conducted due diligence at the time of take over? The obvious answer is yes they would have done. However, if the answer is in the negative then they have lot to answer to their shareholders as to why they took over such a large company without due diligence. What period was covered in due diligence and what were the findings is the second question? Did the due diligence uncover any of these transactions which are being put to question by Diageo led management now? If yes, then why Diageo was silent till now? If no, then is it not a case that due diligence was shoddy and what action they propose against the entity which carried out due diligence? Why they failed to unearth these so called improper transactions? Or is it a case that these transactions were unearthed but Diageo ignored the same as it wanted to go ahead with the transactions and accepted the same? Now when lot of heat is generating, they decided to act? Did any of the so called improper transactions continued even after takeover by Diageo?

A connected issue is series of related party transactions which were entered by USL with entities directly or indirectly connected to UB group / Dr. Mallya. The important question is whether these transactions were flagged off to Diageo in due diligence report? If yes, did Diageo approve of these transactions? If yes, why they approved earlier and now feeling discomforted by the loan agreement and loan transactions? Or they did not know impact of these transactions then?...’

The SES report is attached here…

Attachments : USL- DIAGEO VS. DR. MALLYA DB-JNG_FINAL.pdf
 
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