MUMBAI: The markets regulator Sebi has barred fugitive businessman and ex-liquor baron Vijay Mallya from the securities markets for three years and also restrained him from associating with any listed firm for a similar period for routing funds to the securities market using his overseas bank accounts with the Swiss bank UBS.
The government has been attempting to extradite Mallya from the England to face fraud charges related to his now-defunct Kingfisher Airlines. Mallya has been living in the London since March 2016.
A Sebi investigation covering January 2006 to March 2008 has found that Mallya used Matterhorn Ventures, a foreign institutional investor, to secretly trade in the shares of his group companies--Herbertsons and United Spirits--by routing funds through various overseas accounts. United Spirits is now owned by the English liquor giant Diageo.
The former liquor baron routed money through various accounts with UBS to the market using Matterhorn. He used different overseas entities to hide his true identity, the probe has found. Matterhorn was wrongly listed as a non-promoter public shareholder in Herbertsons even though its 9.98 percent shareholding belonged to the promoter category, noted the order issued Friday.
In her 37-page order, Sebi chief general manager Anitha Anoop said, "The noticee (Mallya) has devised a scheme to indirectly trade in the shares of his own group companies through layered transactions/fund flows using his overseas related companies through the FII route so as to keep his identity masked and trade in the market in defiance of the regulatory norms".
Such acts of Mallya are not only fraudulent and deceptive but are a threat to the integrity of the securities market, she added.
"The noticee indeed misrepresented the truth and concealed a material fact known to him that the shareholding shown in the name of Matterhorn actually belonged to the promoter category as the same was totally funded by him, thereby violating the provisions of the prohibition of fraudulent and unfair trade practices regulations," the regulator noted.
Consequently, Sebi has barred Mallya from "accessing the securities market and also prohibits from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, for three years".
He has also been restrained from "associating himself with any listed firm or proposed to be listed company, in any capacity, directly or indirectly, for three years".
The order came after the Securities and Exchange Board investigated Mallya, who was the chairman of the UB Group and controlling shareholder of United Spirits based on a tip off from the Financial Conduct Authority (FCA).
Earlier in June 2018, Sebi banned Mallya from the market for three years (from June 2018, to May 2021) due to manipulative activities, including fund diversion and improper transactions in USL shares. He was also barred from holding a directorship or any key managerial position in any listed company for five years.
Mallya's appeal against this order was dismissed.