$1.15 billion "potentially diverted" out from RCB's holding company

This is not the first time an Indian Premier League (IPL) team has been speculated to be involved in something of this sort. It seems as if the tournament and its love-affair with financial wrong-doings will continue for a bit longer as an internal investigation within United Spirits Limited (USL) the owners of the Royal Challengers Bangalore (RCB) franchise brought to light these revealing financial transactions.

USL was a company owned by Vijay Mallya, who was also the owner of Royal Challengers Sports Pvt Ltd (RSCPL) – the parent company of the RCB team. The company, now owned by the British beverage company Diageo, is the largest shareholder in RCSPL. In 2014, when the acquisition of deeds took place, the new owner started to conduct inspections into the financial discrepancies in the accounts of USL.

As it turns out, their 2016-2017 financial statements filed before the regulators, discloses an enormous sum of $1.15 billion, or 115 crores in Indian rupees, being “potentially diverted from Royal Challengers Sports Private Limited”, the report in Business Standard said. The report also mentions that the possible fraud was carried on in between October 2010 and July 2014 – a period when the company was under the ownership of Vijay Mallya.

Large financial irregularities

An initial investigation was started about the company by Diageo’s managing director and CEO, months after acquiring majority stakes in USL. The investigation discovered there were large financial irregularities in the funds between 2010 and 2013, a majority of them being transferred to Kingfisher Airlines or some other company. But all of them had one thing in common – they were all part of Mallya’s United Breweries Group.

According to the company’s filings, “between 2010 and 2013, funds involved in many of the transactions that were analysed had been diverted from USL and/or its subsidiaries to certain companies in the United Breweries Group, including in particular, Kingfisher Airlines Limited.”

A follow up on the previous enquiry, that ended in July 2016, went on to reveal that around 1,200 crores in Indian rupees had been diverted from USL’s accounts to overseas entities and the investigators could connect those establishments to the former owner Vijay Mallya, once again. The same investigation followed the breadcrumbs of fund dislocation and reached the latest revelations.

To make things more suspicious, Mallya’s son Siddharth Mallya resigned from the position in 2017, almost 9 months before he was scheduled to, and he also did not attend any of the board meetings between 2015 and 2017. Siddharth was scheduled to be a non-executive director at RPSCL until February 2018 or up until RCB remains a part of the RPSCL holding, whichever is earlier. Before that, Siddharth was actively involved in the projects and proceedings of the company and also cheered for the team from the stands.

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