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I was kept in the dark: Anil
BS Bureau in New Delhi | November 26, 2004 11:12 IST
Anil Ambani has written to his brother Mukesh, saying his powers as vice-chairman and managing director of Reliance Industries have been diluted by "keeping him completely in the dark".
The four-page letter to Mukesh Ambani on October 25 came three weeks before the Reliance Industries chairman and managing director admitted to a TV channel that there were ownership issues in the company.
Anil Ambani's letter also raised issues of corporate governance over the introduction and clearance of a supplementary agenda during the company's board meeting on July 27.
The agenda sought to curtail Anil Ambani's powers by stating that he "will carry out orders and directions given by the board and his functions will be under the overall authority of the chairman and managing director".
The letter says such "redefinition of powers of the managing directors is not in accordance with the law, and is in conflict with the provisions of the Companies Act, 1956, the memorandum and articles of association of our company, and the agreements approved by the shareholders for appointment of managing directors".
When contacted, a Reliance Industries spokesperson said he had no comments to offer on the issue and was "in no position to help". The spokesperson suggested that the question be directed to K Sethuraman, senior vice-president and company secretary.
But repeated phone calls to Sethuraman's office yielded no response. "He is out of his cabin and would call back, if required," his secretary said.
That the tension between the brothers has been building for quite some time is evident from an e-mail sent by Anil Ambani to his brother on July 30, three days after the board meeting.
"There appears to be more than meets the eye... (The) undue haste with which the draft minutes were prepared is causing me concern that there may be an ulterior motive and design," the e-mail says.
In his letter, Anil Ambani asked his brother to keep the supplementary agenda (item no 17 of the draft minutes) in abeyance till a final decision was taken on "a mutually agreed basis".
"However, if this is not acceptable to the chairman, my views may kindly be placed on record and taken into consideration by the board," the letter adds.
Anil Ambani's letter says the supplementary agenda was introduced without the vice-chairman and managing director's knowledge even though some of the other directors on the Reliance Industries board, and several employees, were aware of the move.
The agenda, Anil Ambani said, had a misleading title suggesting it was essentially concerned with the formation of a health, safety and environment committee.
"The clubbing together of a very substantive proposal on redefinition of the powers of the MDs with this unrelated subject obscured its real purpose and prevented a proper appreciation of its consequences," he said.
The letter also says the board did not discuss the issue of redefinition of the powers of the MDs, as "incorrectly stated in the minutes". The discussions, lasting barely two minutes, were only in relation to the composition of the health committee, it adds.
Specifically, the proposed redefinition of the powers of the MDs "reflected a substantial variation of the equation as had existed in Reliance for the past two decades, and this clearly required intensive discussion in the board", the letter says.
Anil Ambani also pointed out that contrary to claims, the directors did not unanimously approve the resolution. "The fact is there were no discussions, and there was no vote. The incorrectness of the minutes is evident from the fact that even I am supposed to have voted in favour of the proposed resolution. Clearly, I as VC & MD, would not vote for the prejudicial variation of my existing authorities and powers," he said.
The letter has sharply criticised the "unseemly and unprecedented haste" shown in the preparation of the draft minutes, and in obtaining confirmation from other directors on the date of the board meeting, before even showing them to the vice-chairman of the company. Besides, the minutes were not sent to him till two days after the board meeting, Anil Ambani's letter says.
Under the practice followed by Reliance Industries for over 10 years, draft minutes of board meetings are prepared 20-30 days after the meetings, circulated to the two managing directors for confirmation, and then sent to the other directors, the letter says.
Anil Ambani said he had expressed his concern at the turn of events to a few directors on July 30. The letter adds that the episode is a "sad reflection... of how we are seeking to preserve and carry forward the legacy and past traditions of Dhirubhai Ambani".
Anil Ambani's letter says almost 90 days after his e-mails to Mukesh he had received no acknowledgement from his brother. "Instead, it has been communicated to me on the CMD's behalf that the matter is final and cannot be altered," the letter says.
'Many long days ahead'
Reliance Energy Chairman and Managing Director Anil Ambani said on Thursday he would "continue to maintain his silence on the issue till an appropriate time".
"If there is a need and it arises, I shall speak at an appropriate time," he told the waiting media at the Reliance Centre in Mumbai.
On the mass resignations from the Reliance Energy board, Anil Ambani said, "I have received the resignations and the (Reliance Energy) board will consider the resignations."
Ambani refused to be drawn into any discussion on the "ownership issue", saying grimly, "This has been a long day and there will be many long hours and days."