Reliance's Smoking Gun?
No. 84 Mittal Court is a small, unremarkable office in Nariman Point, Bombay's financial district. There's no company name on the door, just a sign indicating that it is a "registered office." Despite its nondescript appearance, the office is now one of Bombay's most famous addresses. In December, parliamentarian Raashid Alvi gave Indian Prime Minister Atal Bihari Vajpayee a 1,600-page report alleging that 84 Mittal Court is the official home to at least 200 companies held privately by Reliance Industries Ltd.'s majority owners, the powerful Ambani family. States Alvi in his report: "It is the most crowded address in Bombay."
Who provided the details of the report is the subject of much parlor conjecture: Alvi isn't saying. And the report, though commissioned by parliamentarian Alvi, does not constitute an official parliamentary inquiry. But its allegations are sending shock waves through India. The report accuses Reliance Petroleum Ltd., a company 64% owned by parent Reliance Industries, of diverting to private companies at least $230 million from its 1993 initial public offering, for the benefit of the Ambani family. Titled "Complaint to the government and its agencies regarding fraudulent misuse of large-scale public funds by Reliance Petroleum Ltd.," the report claims "irrefutable & solid evidence" of 15 contraventions of the law. Alvi, a Supreme Court lawyer, says the activities amount to fraud, which, if proven, he adds, would make Reliance liable for penalties of $1.3 billion.
Reliance Director Anil Ambani says there's no truth to Alvi's statements. "We have never violated any rules," he insists impatiently. In fact, at a grand tea party held on Apr. 30 in Bombay to announce the annual results of Reliance Industries and Reliance Petroleum, Ambani refused to address Alvi's specific allegations. "Regarding the malicious campaign," he would only say, "it's a 10-year-old matter. Reliance has complied with all the laws and regulations." The dapper, 42-year-old scion went on to discuss Reliance's growing revenues and profits, its leadership in all of its businesses, and its top ranking among Asia's most creditworthy, profitable, and valuable companies.
For four months the report triggered no official action against Reliance. Finally, in April, Alvi made his allegations public. And by early June, the Department of Company Affairs, which enforces compliance with corporate law, had launched an investigation. Alvi insists he has no ax to grind. But he claims he has received death threats and is not optimistic that the facts behind his allegations will ever be fully probed.
By Manjeet Kripalani in Bombay