FRL independent directors threaten to 'expose' Amazon

Independent directors of Future Retail Ltd are collating information and will expose the details of contradiction and misrepresentation made by Amazon before the Competition Commission of India (CCI), said FRL independent director Ravindra Dhariwal.

Speaking to PTI, Dhariwal said the independent directors are “collating” all the pieces of information together, going “deeper into each and every representation” which Amazon had made before the CCI and showing how its “intent was totally contradictory.”

“We are going out to point exactly to CCI, this is what they have told you and this is what the internal documents are saying.

"We are going to expose the details of contradiction and details of misrepresentation, which they have made,” Dhariwal said adding “We are going to show the true face of Amazon to the whole world”.

In November 2019, Amazon had acquired a 49 per cent stake in Future Coupons Pvt Ltd (FCPL), a company that holds a stake in FRL.

CCI had given its approval for Amazon to acquire stake.

Asked why the independent directors are raising the issue almost three years after the Amazon-Future Coupons deal, Dhariwal said it is only now that the intent of Amazon has come into public light after the submission made by the e-commerce major before the arbitration proceedings in Singapore at the SIAC.

Earlier, they have always represented that they have no interest in Future Retail Ltd (FRL), he added.

“The question, why now because its only now Amazon has revealed its true intent that it was strategic in nature.

"In the last two weeks, in court filings, we got to know that.

"Why we independent directors are involved because it is our fiduciary responsibility, we have to do it,” Dhariwal said.

According to him, the independent directors have an obligation towards the protection of the ordinary shareholder of the company, lenders and bankers, employees and small stakeholders.

“Around 50,000 employees would lose their job, Rs 30,000 crore PSU (banks) money would be written off,” he said.

Earlier this week, the independent directors of FRL approached the CCI, urging it to revoke the approval it had given to the Amazon-FCPL deal in 2019, alleging the e-commerce major of “making false statements before it”.

The Commission should immediately confirm the revocation of the approval granted to Amazon for its investment in FCPL, the letter had said.

“CCI would have become wary and forwarded the papers to DEA (Department of Economic Affairs) for examination if the acquisition of controlling rights is allowed under FEMA regulations,” they had said adding that “Amazon has cleverly prevented CCI from doing this and has taken shelter that its investment in FCPL is under automatic route”.

FCPL is a shareholder in Future Retail and the e-commerce major Amazon is contesting the Rs Rs 24,713 crore deal announced last year by Future Group for sale of the retail and wholesale business, and the logistics and warehousing business to Reliance Retail Ventures Ltd, a subsidiary of Reliance Industries Ltd.

While defending FRL's deal with Reliance, Dhariwal said Amazon was aware of the discussions going on with billionaire Mukesh Ambani-led conglomerate.

“They have written several times. When the company was in difficulty in March 2020, Amazon was the first one the company went to for help.

"They did not help. Their only interest is either I get it or if not, then I am going to destroy it,” he said.

Amazon has told FRL to go ahead with the deal and in the negotiation process, they constantly maintained that they knew about the Reliance discussion going on.

“This was going on since April last year. They knew about it and never once objected to it,” he said.

Amazon never once stopped it saying that it was a part of the negative list.  "Not once," he added.

The independent directors cleared the Reliance deal only after FCPL, in which Amazon is 49 per cent equity holder, gave the green signal.

“We independent directors were told very clearly that Amazon has agreed to that and we had a consent letter from FCPL and we signed it.

"Now what we know is that what they represented (before CCI) that was totally wrong,” he said.

Dhariwal further said the independent directors are not beholden to Amazon or Reliance or any promoters.

“We are only beholden to protect the job of people to protect the investment made by the small shareholders made in this company, bankers which had lent their money," he added.

Amazon is contesting the deal through its shares in FCPL and had approached Singapore International Arbitration Centre (SIAC).

The companies have also approached Indian courts in this matter.

In October last year, an interim award was passed by the EA (the emergency arbitrator) in favour of Amazon that barred FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.

This was also upheld by SIAC last month which said FRL is a party to the ongoing arbitration between Amazon and Future group in the dispute over the sale of its assets to Reliance Retail.

Photograph: Francois Lenoir/Reuters