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Diageo has declined to comment on an Indian government investigation into United Spirits' books as fresh reports emerge over the subsidiary’s chairman, Vijay Mallya, and alleged loans made from the unit.

United Spirits is 55%-owned by Diageo

United Spirits is 55%-owned by Diageo

In Q1 results released this week, United Spirits said it had received notice from the Ministry of Corporate Affairs for an inspection of its accounts. The company said it is "cooperating fully" with the request.

Diageo, which owns 55% of United Spirits, told just-drinks today it will not comment on the investigation.

The government's move follows an internal review of United Spirits after auditor KPMG found discrepancies in the division's fiscal-2014 accounts. The review found that transactions were diverted from the company to other UB Group companies, including in particular, the struggling Kingfisher Airlines.

Today, Indian news outlet Daily News & Analysis (DNA) said it had obtained documents that show about INR1.7bn (US$26.6m) was diverted from United Spirits to Mallya's Indian cricket team, the Royal Challengers Bangalore. DNA said the funds were moved in 2011, when Mallya had "complete control" over United Spirits.

Diageo today reaffirmed to just-drinks that it is considering its position with UB and Mallya in light of the inquiry report. Diageo is contractually obliged to vote in favour of Mallya continuing as chairman at United Spirits.

The United Spirits board has previously called on the entrepreneur to stand down as its chairman.


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