Amazon letter accuses Future group of fraud, seeks forensic audit

E-commerce giant writes letter to retail chain's independent directors, seeks independent probe of dealings with RIL

US e-commerce giant Amazon has written to the independent directors of Future Retail (FRL) asking for a forensic audit and alleging "fraudulent and malicious conduct" by the Indian company and its founders, Kishore Biyani and his family.

Amazon is fighting a legal battle to stop FRL’s $3.4-billion deal to sell the business to Reliance Industries Ltd (RIL). The letter, written to FRL independent directors Ravindra Dhariwal, Jacob Mathew and others, said a forensic audit will ensure that promoters, counter-parties and other persons do not take corporate governance regime for granted.

“As a matter of fact, in your capacity as Independent Directors of FRL, you ought to conduct a thorough investigation into the fraud committed by FRL, its Promoters, Directors and Key Managerial Personnel,” said Amazon’s letter dated July 4 and reviewed by Business Standard. An email query to Future Group remained unanswered.

Amazon said an independent investigation is needed by statutory authorities, regulators and enforcement agencies into the accounts and financial dealings of FRL and the Biyani family.

Amazon wrote to FRL independent directors in response to their letter dated May 28, 2022. It alleged the letter was issued with the motive to obfuscate issues that the independent directors are obligated to answer.

Amazon denied allegations made by the independent directors in their letter. The firm said the independent directors have admitted that FRL entered an illegal arrangement with the Mukesh Dhirubhai Ambani (MDA) Group, which is part of Reliance, to continue running the retail stores even when no money was paid to MDA as rent for these premises.

The entire sequence of FRL surrendering stores and the MDA Group terminating such leases was a stratagem, Amazon alleged. “Further, it is disappointing that Independent Directors permitted such arrangement with the MDA Group, and ultimately allowed the handover of retail stores to the MDA Group,” said Amazon.

“Your conduct and attitude, as the Independent Directors of FRL, raises substantial questions on accountability, transparency and fairness regime for corporate governance in India,” said Amazon.

The firm said that it appears that the Future group accused the MDA Group of forcibly taking away its stores and yet wanted to sell its logistics and fashion assets to them.

Amazon alleged that FRL through a fraudulent and convoluted stratagem, which was played out in collusion with the MDA Group, alienated a substantial majority of FRL’s Retail Assets (835 retail stores) in favour of the MDA Group.

Amazon’s letter has also been sent to former FRL independent directors Gagan Singh, Sridevi Badiga and Shailendra Bhandari. It has also been sent to Madhabi Puri Buch, Chairman, Securities and Exchange Board of India, K V Kamath, Chairperson, Expert Committee, Reserve Bank of India, Neeraj Kulshreshtha, Chief Regulatory Officer, BSE Limited, Priya Subbaraman, Chief Regulatory Officer, National Stock Exchange of India Limited. Other recipients of the letter include the Union Bank of India, Bank of India, State Bank of India, Bank of Baroda, Central Bank of India, Punjab National Bank, UCO Bank, and Qatar National Bank.