United Spirits chairman declared a ‘wilful defaulter’

Vijay Mallya, the Indian liquor baron once known as the King of Good Times, was declared a "wilful defaulter" yesterday by state-owned United Bank of India (UBI), throwing doubts over his ability to remain as chairman of United Spirits, now owned by Diageo, and United Breweries, part-owned by Heineken.

UBI, which is owed a total of about $66 million (€50 million) by Mr Mallya's failed carrier Kingfisher Airlines, says that it believes the businessman had the capacity to repay an emergency overdraft it had extended to him, but deliberately opted not to – fulfilling the Reserve Bank of India's criteria for being a "wilful defaulter".

"Our stand is he borrowed from us, he had the money, and he did not repay," Deepak Narang, executive director of UBI, told the Financial Times. The now grounded Kingfisher Airlines, and three of its other directors, were also declared wilful defaulters.

Both the central bank and the Securities and Exchange Board of India were notified of UBI’s decision, after neither Mr Mallya nor his representatives turned up for a Monday-morning grievance hearing intended to be the last step before declaring a wilful default.

Once tagged as wilful defaulters, business people can be barred from accessing India’s financial markets and kept out of influential corporate positions.

– (Copyright The Financial Times Limited 2014)