India probing Kingfisher Airlines over alleged financial irregularities

MUMBAI, Sept 15 (Reuters) - India's federal financial fraud investigating agency has sought information from drinks company United Spirits Ltd (BSE: UNITDSPR4.BO - news) in connection with a probe into former group firm Kingfisher Airlines Ltd (BSE: KFA6.BO - news) over alleged diversion of funds.

The agency is looking into alleged financial irregularities from 2005, when liquor baron Vijay Mallya's UB Group controlled both companies, TV channel CNBC TV18 reported on Tuesday.

United Spirits, India's largest spirits company and now controlled by Britain's Diageo (LSE: DGE.L - news) , said in a statement to the Bombay Stock Exchange on Tuesday that it was cooperating with the investigating authority, the Serious Fraud Investigation Office (SFIO), in a probe of Kingfisher Airlines and was providing the required information.

Kingfisher (LSE: KGF.L - news) has not flown since 2012 due to a lack of cash. The airline owes about $1.5 billion to lenders.

An auditor's inquiry into United Spirits' financial accounts, conducted after Diageo took control, showed that between 2010 and 2013, funds were allegedly diverted illegally from the company to some of Mallya's group firms, including Kingfisher.

As a result, the board of United Spirits, under the new Diageo management, began a procedure in April to remove Mallya from his position as chairman.

"The SFIO noted that the company (United Spirits) had conducted an inquiry wherein possible fund diversions were identified, and requested some information from the company in relation to that," United Spirits said in the statement.

Mallya has denied the allegations and in April said in a statement to Reuters that he would not resign as chairman of United Spirits. A spokesman for Mallya's UB group declined to comment on the SFIO probe on Tuesday. (Reporting by Sumeet Chatterjee and Devidutta Tripathy; Editing by Susan Fenton)