Anil seeks greater disclosure

Governance report clears Reliance board.

Even as the three-member committee set up by the Reliance Industries Ltd board to probe the allegations made by Vice-Chairman and Managing Director Anil Ambani on issues related to corporate governance gave a clean chit to Reliance Industries, Anil Ambani today proposed that the company's directors make a full and complete disclosure of their financial and other dealings, including those of their relatives, with the Reliance group.

He, through his spokesperson, said the proposal was "in the interests of upholding the highest standards of corporate governance, transparency and disclosure and to protect and enhance the interests of RIL's more than 20 lakh shareholders."

The report of the corporate governance committee was submitted in end-February but circulated among the board members last week, ahead of tomorrow's meeting of the Reliance Industries board.

Sources close to the development said the Reliance Industries board, which would meet to consider the company's annual results, might discuss the report as well.

The report of the committee -- consisting of chartered accountant Y P Trivedi and former bureaucrats D V Kapur and M P Modi says that Reliance Industries has not violated any disclosure norms.

On certain issues, it reserved comment as they are in the private domain and "beyond the purview of the committee".

A source close to Anil Ambani said the committee's report was not surprising.

Anil Ambani had written a letter to the board of Reliance Industries in mid-January alleging gross violations of corporate governance by the company, particularly in regard to its investment in the group's telecom venture Reliance Infocomm.

Subsequently, the board set up the committee to look into the allegations.

When contacted, Reliance Industries executives refused to comment on the development.

The report did not find merit in any of Anil Ambani's observations. For instance, on Anil Ambani's allegation about the non-disclosure of the marketing agreement between Reliance Industries and Reliance Infocomm, the report said it "did not require disclosure" and the "import and sale of handsets (are) not a related party transaction".

The committee made the same observation on the assignment of receivables of Rs 3,500 crore by Reliance Industries to a group company, Smart Entrepreneurs Solutions.

On the charge that no disclosures were made to the company's board in respect of Mukesh Ambani's conflict of interest as chairman and managing director of Reliance Industries and Reliance Communications Infrastructure (RCIL) and Reliance Infocomm (RIC), the committee said no further disclosure was required since the transactions between RCIL and RIC had been disclosed in the statement of accounts.

Anil Ambani proposed that Reliance Industries' ownership in Reliance Infocomm required to be enhanced from 45 per cent, in view of the company's substantial additional investments in forms of other than equity.

However, the committee said "additional investments by RIL do not provide a justification to alter existing levels of equity shareholding in RCIL and RIC."

Similarly, Anil Ambani pointed out that there was no clarity on the ownership and management of the four associate companies that hold a 4.7 per cent equity stake in Reliance Industries, arising after the merger of RPL with it. The committee maintained that "there is no need for any change in the structure".

Stand-off

ANIL'S ALLEGATION: Non-disclosure of the marketing agreement between Reliance Industries and Reliance Infocomm

GOVERNANCE COMMITTEE: Does not require disclosure

ALLEGATION: Mukesh Ambani's conflict of interest as chairman and managing director of Reliance Industries and Reliance Communications Infrastructure and Reliance Infocomm

COMMITTEE: No further disclosure required. Transactions had been disclosed in the statement of accounts