‘RIL, RCOM investors were short-changed during split’

Mumbai: A Canadian research firm, Veritas Investment Research, has slammed billionaire industrialist brothers Mukesh and Anil Ambani in a report that attacks poor corporate governance standards in India Inc. The report—'Brothers in Arms: Misappropriating a Fortune'—said Reliance Industries and Reliance Communications have shortchanged investors during the family split, which it calls "a charade" to take the fortune away from minority investors. The Ontario-based equity research firm, little known in India, released the full version of the report on July 18. Reacting sharply to the report, a Reliance Communications spokesperson in an email reply said, "Veritas is an unknown organization lacking any credibility whatsoever, and it has, for ulterior and dishonest motives, published a malicious and motivated report containing baseless allegations, masquerading as research."      "The language of the report, and the manner of dissemination of the same in an orchestrated manner over the past four weeks in multiple Indian languages by the Canadian outfit debunks any claims of the same being genuine research, and clearly establishes the same to be the handiwork of our unscrupulous corporate rivals," the RCOM statement said, adding that the company's accounts are duly audited by top international accounting firms for the past several years. Reliance Communications statement also threatened to take legal action in Canada, India and elsewhere against publication of any part of the false and defamatory comments in the report.      However, RIL officially refrained to offer any comments on the report, which alleged that Reliance Communications "is the poster child of everything that is wrong with corporate India, and irrespective of management's assertions about 'values' and 'integrity' in various annual reports, we find no credible evidence of either in its financial statements or those of its former parent, RIL."      However, a source close to RIL questioned the motive behind such a report six years after the demerger of telecom business. "The demerger was approved by the Bombay High Court and shareholders of RIL in 2005. What is the objective of coming with such a report now? The report is baseless and done with a malafide intention by corporate rivals," said the source. Neeraj Monga, co-author of the report, in a telephone interview from Canada, told TOI, "They (Reliance) have abused the system. They have abused the law. The ownership of RCOM was stolen away from the minority shareholders by the promoters." When asked if RIL and RCOM will sue Veritas, Monga said, "They (Reliance) will have to prove in court that they invested Rs 13,675 crore for owing 67% stake in RCOM. Promoters wrested majority stake during demerger by investing only Rs 186 crore while the minority shareholders of RIL invested Rs 13,675 crore for owning only 33% stake. This is duping the shareholders." Mukesh and Anil Ambani (right)