New Delhi: Diageo's shareholders were today advised to hold the board accountable for its inability to "break free" from the strangle hold of Vijay Mallya, who resigned as chairman from the global brewer-controlled USL. Bringing the curtains down on a long-drawn battle with Diageo, Mallya on February 25 quit as USL chairman and would receive USD 75 million in a sweetheart deal.
Besides, he would be absolved of any personal liabilities related to alleged irregularities that happened at USL under his watch. Proxy advisory firm IiAS on February 26, said the terms for Mallya's exit suggest that Diageo and United Spirits Ltd (USL) wanted a clean break from Mallya.
"While USL's shareholders have been short-changed, the decision to untangle the company from the UB group is in their long term interest. "Diageo is picking up the tab for this exit, but Diageo's shareholders must hold board accountable for its inability to break free from the Mallya stranglehold," IiAS said in a report.
Given the wilful defaulter tag on him related to loans extended to the now defunct Kingfisher Airlines, IiAS said Mallya's position as USL chairperson risked freezing the company's access to bank finance and compromising its overall governance quality and its reputation.
"Given Diageo's deal with Mallya allowing him to walk away, leaves them (USL shareholders) short-changed.
They can either pursue this with regulatory authorities in India (possibly without the company's support since it has allowed Mallya to walk away) or exult in the clean break... and wait for new owners to deliver," the report noted.
According to Diageo, Mallya would have no "personal liability" to the UK-based company in relation to the findings of the alleged financial irregularities at the company that had triggered an acrimonious fight between them.
Mallya has agreed to resign from boards of all USL group firms, including as chairman and non-executive director of USL. He would become 'founder emeritus' of USL and Chief Mentor of RCB, the IPL cricket team.
