Embattled chairman of United Spirits in stand-off with Diageo

The stand-off arises from Diageo’s £1.8bn purchase of United Spirits in 2013

Diageo, the owner of the Johnnie Walker and Smirnoff brands, is facing a bitter legal battle with Vijay Mallya,the Indian businessman and Kingfisher Airlines founder.

The stand-off arises from Diageo’s £1.8bn purchase of United Spirits in 2013, where Mr Mallya is chairman. The flamboyant entrepreneur was asked to step down this weekend by the board of United Spirits, after an inquiry found evidence that he had diverted cash from the drinks group to other parts of his empire between 2010 and 2013.

In a statement United Spirits said it had “without making any determination as to fault or culpability” it had “lost confidence in Vijay Mallya continuing in his role”.

During the period of the inquiry, Mr Mallya was trying to save the loss-making Kingfisher Airlines, ultimately without success.

United Spirits said that its inquiry “revealed that between 2010 and 2013, funds involved in many of these transactions were diverted … to certain… companies, including in particular, Kingfisher Airlines Ltd”.

Mr Mallya denies he has done anything wrong, saying the conclusions of the investigation by accountants PwC are based on “half-truths and twisted facts”. He is refusing to resign and is understood to be lining up a top legal team.

He tweeted: “I will continue as normal in my position as chairman of USL. I am not going to submit myself to a trial by media.”

Diageo, which now owns 55 per cent of United Spirits, confirmed it is contractually obliged to support Mr Mallya continuing as chairman “subject to certain conditions and in the absence of certain defaults”. However, a Diageo spokeswoman said that the company “would be treating the matter very seriously”.