Future Retail denies Amazon charges of facilitating 'fraudulent stratagem'

FRL says it has already made necessary disclosures on termination of leases, and has provided related updates

Future Retail Limited (FRL) on Thursday said it denies all allegations made in the media by Amazon on the Company, where the American e-commerce giant has accused independent directors of FRL of facilitating a "fraudulent stratagem" of transfer of 835 stores to Reliance group.

“At the outset, we deny all allegations made in the said media report by Amazon on the Company,” said FRL in a filing to BSE. “FRL further wishes to submit that Amazon has been writing to various regulators on one or the other point related to the company and has been making baseless, irrelevant allegations and as usual giving the same wide publicity by circulating copies of such communication to the media. As is evident Amazon is changing its goal post every now and then with respect to various matters concerning the Company.”

FRL further pointed out that the company has already made necessary disclosures in relation to termination of leases on February 25, March 9, 2022 March 16, giving the update in relation to the same.

“Copies of these disclosures are enclosed herewith for your ready reference,” said FRL.

It said the March 16, 2022 letter captures the complete details in this respect. The company is not aware of any information, which requires to be disclosed to stock exchanges pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“the Listing Regulations”) and which has not been disclosed. “As the article is having information which has been provided only by one party with malafide intent, it should not have any material impact on the Company, “ said FRL.

Earlier,  Amazon wrote on May 19 to independent directors of FRL. It had accused independent directors of Future Retail Ltd (FRL) of facilitating a "fraudulent stratagem" of transfer of 835 stores to Reliance group, saying the narrative of that transfer was on account of failure to pay huge outstanding rent was a "sham" as the retailer had a month prior to such move stated that outstanding rent was only Rs 250 crore.

Amazon wrote to independent directors of FRL and stated that the firm had in a meeting with core lender banks on January 1, 2022, "categorically admitted that the unpaid rental dues was Rs 250 crore only. FRL further stated that it voluntarily retained the amount."

"Surprisingly, FRL had managed to do so without discontinuing any of its operations or handing over its stores," it wrote. "Consequently, any narrative that there was a purported transfer on account of failure to pay huge outstanding rent for as many as 835 retail stores, that too as quickly as on February 26, 2022, is nothing but a sham and a false narrative to regulators, creditors, the shareholders and the Courts."

The issue between Amazon and Future goes back to August 2019, when Amazon acquired 49 per cent in FCPL (Future Coupons Pvt Ltd), the promoter entity of FRL, for around Rs 1,500 crore. One year later, in August 2020, Future Group struck a $3.4-billion asset-sale deal with RIL.

In October 2020, Amazon sent legal notice to Future for doing the deal. It alleged it breached Future’s agreement with Amazon. It cited its non-compete agreement with Future. The deal specified any disputes would be arbitrated under the Singapore International Arbitration Centre (SIAC) rules. The same month, October 2020, Amazon got a favourable ruling for its plea at the SIAC. In November 2020, Future moved the Delhi High Court (HC) against Amazon, alleging interference by the US firm in the deal with RIL. Since then, Amazon has been fighting a legal battle with FRL to stop Future’s $3.4-billion deal with RIL.