A K Bhattacharya: A lost opportunity

NEW DELHI DIARY

The Ambani brothers have resolved their dispute and peace seems to have descended on the Reliance empire. It is, therefore, time to take a close look at the kind of responses the intensely fought seven-month battle evoked from different quarters.

Investors were worried over the dispute and its impact on the valuation of their Reliance shares. They wanted their investments to remain unaffected by either the battle or any asset split in the wake of the resolution of the dispute.

Investors now feel reassured by the resolution formula. Which is why, the Reliance stock price has been buoyant ever since the dispute was resolved last month.

The way the investors responded to the battle is perfectly understandable. But what defied logic was the manner in which the Manmohan Singh government behaved.

Serious charges of corporate misgovernance were levelled against the company. The government was supplied with enough documents to justify a proper probe into the manner in which the investors' interests were compromised.

The ministry of company affairs moved very slowly on the issue. The Securities and Exchange Board of India (Sebi) also displayed no desire to take suo motu action on the many instances of misgovernance in Reliance,as reported in newspapers.

And now that the brothers have smoked the peace pipe, the few investigations that were launched seem to have been dropped. At least, no one gets to hear any progress in those investigations.

This is not surprising. When the war broke out, several senior functionaries in the government appeared to be very distressed.

And everybody expressed the hope that the two brothers should patch up as soon as possible and keep the legacy of their great father alive.

Even Finance Minister P Chidambaram said he was sad to see them fighting over such issues in public and hoped that they would sort out their problems through consultations.

There is no problem in ministers wishing the two brothers well. But what about their responsibilities? Shouldn't they have taken note of the several instances of violation of the governance norms, cited by the younger Ambani? In the absence of any government action, it is reasonable to question the logic of such sentiments.

Why has Company Affairs Minister Prem Chand Gupta not come out with a clear answer on the progress of the investigations? And why haven't these unresolved governance issues in the country's largest corporate entity not become a subject of heated debate in Parliament? Aren't our members of Parliament not interested in the observance of governance norms in Indian companies?

It may not be fair to point fingers only at ministers and parliamentarians. Quite a few commentators and media columnists also were overwhelmed with grief after the dispute between the two brothers came out in the open.

One commentator in a weekly admitted how pained he was over the Ambani dispute and wished they buried the hatchet as soon as possible.

Forgotten were the key issues the dispute threw up. Nor did the commentator consider it his responsibility to examine how serious the charges were and whether the ordinary investors in the group were taken for a ride.

Another commentator in a daily dismissed all the media coverage of the Ambani dispute as "plants". Yes, they may have been plants, but they were all relevant issues, most of whom were based on facts.

Most investigative reports that have shaken governments in India and western democracies could be described as plants. But because these investigative reports were also based on facts, they will be rated as fine pieces of journalism. So, what was the commentator trying to suggest?

The same commentator complimented the Manmohan Singh government for staying out of this corporate war between the two brothers. This was a sign of neutrality, he argued.

Should the government be complimented for such neutrality, which is nothing but inaction? On the contrary, such neutrality should be criticised for not having taken the necessary action against those found guilty of violating governance norms.

The point that seems to have been missed is that the Ambani dispute had given the media and the investing community the first real opportunity to examine and analyse the way India's largest corporate entity was operating over the years.

This was a rare opportunity. And several sections of the media grabbed it. Every investor had benefited from this. There is now greater transparency in the way Reliance is held and is run.

It is a pity that the government did not act on the complaints. If it had, we could have expected even more transparency and better governance.

akb@business-standard.com