Californian pension fund opposes Saudi appointment on RIL board

Proxy advisory firm questions Saudi Aramco's chairman Yasir Al-Rumayyan's 'independence' on RIL board

The California State Teachers’ Retirement System (CalSTRS), a US-based pension fund, has decided to oppose the appointment of Saudi Aramco’s chairman, Yasir Al-Rumayyan, as an independent director on the board of Mukesh Ambani-led Reliance Industries (RIL). This disagreement is due to Al-Rumayyan’s position in Saudi Arabia’s Public Investment Fund (PIF), as its governor, as well as in Aramco.

PIF has already invested Rs 9,555 crore in Reliance Retail and Rs 11,367 crore in RIL’s Jio Platforms. Aramco and RIL have been in talks for another equity deal that involves 20 per cent of Reliance’s oil-to-chemical business.

An on June 30, 2020, CalSTRS held 5.3 million fully and partly paid shares of RIL, according to its website. CalSTRS is the America’s second largest public pension fund with assets totalling approximately $318.4 billion as of August 31, 2021.

CalSTRS’s opposition is based on a report by Glass, Lewis & Co., an American proxy advisory services company, that claims to advise more than 1,300 clients. According to Glass, Lewis & Co, its clients include a majority of the world’s largest pension plans, mutual funds and asset managers, who collectively manage more than $40 trillion in assets.

Speaking at the 44th annual general meeting (AGM) of RIL, Ambani said Al-Rumayyan “joining our board is also the beginning of internationalisation of Reliance. You will hear more about our international plans in the times to come”.

According to Glass, Lewis & Co., since Al-Rumayyan has a key role in the operations of Aramco and PIF, he does not qualify to be an independent director. Under the Indian law, an independent director cannot have a role in any company that has a business or equity partnership with the company that intends to appoint him or her. As PIF has a stake in RIL’s subsidiaries and Aramco is looking to buy stake in Reliance OTC Ltd, Al-Rumayyan’s ‘independence’ on the RIL board is under question.

RIL refused to comment on queries sent by Business Standard.

According to RIL officials in the know, Aramco Chief Yasir Al-Rumayyan can be an independent director since the stake buy deal is for a subsidiary of RIL and not the parent company. He would be the first non-Indian director on the RIL board.

In earlier deals, such as the ones with Google and Facebook, RIL had offered directorships to investors in its subsidiaries. David Fischer from Facebook and Donald Harrison from Google are part of the board of Jio Platforms. Google and Facebook bring in technologies while Jio gives them access to the Indian market.