Millennium Post

it’s high time to come clean

Mukesh Ambani-led Reliance Industries Limited’s (RIL) latest denial of its alleged involvement in Rs 6,500-crore plus money laundering through a Singapore-based ‘open-and-shut’ company, Biometrix Marketing Pte Ltd, and its reinvestment into group firms in India, including the one engaged in KG basin gas exploration, as foreign direct investment (FDI) raises more questions than provides convincing answers to the seven-year-old transaction the legality of which is yet to be established by the Delhi High Court. Legal luminary Prashant Bhushan, an anti-corruption crusader and Aam Aadmi Party leader, has raked up the issue once again as a Lok Sabha election campaign ammo. Surprisingly, RIL’s response appears to be weak, if not less convincing.

RIL said the investment made by Biometrix was from loans raised from the Singapore branch of ICICI Bank and disbursement notices were issued by the bank to Biometrix to cover the entire amount. What the RIL clarification does not explain was the objective behind the creation of the shell company in Singapore and why was it closed down after the fund transfer to RIL group firms in India? That Biometrix was reportedly operating out of a small one-room flat and never filed income-tax returns as it was a small company without equity and assets worth reporting is not unusual as that’s how most shell companies operate across the world.
However, what looks unusual is ICICI Bank’s eagerness to raise huge loans for a company without notable equity and asset to merit such loans? ICICI is an Indian Bank and also one of the major bankers of RIL. Would a Singapore-based global bank raise such large loans for an asset-free Indian shell company there? Was ICICI used by RIL as a conduit to launder its unaccounted money from India? One can’t be too sure on such matters especially after the United States regulators came down heavily on global bank HSBC after its international money laundering operations were first ‘exposed’ two years ago. Among the countries mentioned to be involved in HSBC’s worldwide shady operations was India. HSBC’s laundered money trail even reportedly found funds linked with terrorist organisations.
The identities of lenders to Biometrix and the terms of such lending are not clarified either. These lenders’ identification, their business background, including ownership, could probably establish the genuineness of their operations. Even the bank could clear those puzzles to uphold its own image and help a mega-client RIL rid of suspicion of money laundering. There are many other simple questions pertaining to the Biometrix deal. Which are the non-RIL companies in India for which Biometrix raised such loans to be ploughed back as FDI, who all held guarantee for such loans, what were the loan terms, why was the Singapore shell firm shut down after the fund transfer to RIL, if so, and who carries the liability of servicing those loans after Biometrix was shut down are among several unanswered questions fueling the suspicion surrounding the Biometrix-Reliance group deals.

RIL would probably do well to provide a proper answer to all these concerns to come clean on the money laundering charges, which are, by all means, very serious. And, one could not agree more that such public references to money laundering, globally regarded as a serious financial and criminal offence, by way of ‘mechanical replay of allegation and insinuation’ do affect the sentiment of RIL’s millions of stakeholders across the world. Prashant Bhusan’s statement has already hit the market sentiment as RIL’s share price took an instant dip below its investors’ psychological comfort level of Rs 800. If the Singapore-based Indian High Commission’s letter to the government in August 2011 that ‘the investment needs to be examined’ is fake, the onus is on RIL to establish it.

Prashant Bhushan has demanded a thorough investigation into these transactions in which privately-held companies of Reliance supremo Mukesh Ambani allegedly received Rs 6,530 crore through a multi-tired deal routed through two companies, including Biometrix, in Singapore. Bhushan has already produced the letter purportedly written by the Indian High Commission. 

The UPA government’s inexplicable inaction regarding Bhushan’s allegation has given credence to such claims and, in a way, establishes the general public perception of an unholy UPA-Mukesh Ambani alliance that is compromising on the national interest. Maybe, Veerappa Moily, the petroleum minister, perceived as a great admirer of RIL’s business model, should order a CBI investigation into these allegations to reconstruct the image of Ambani as well as the government as a symbol of honesty and good governance.

With the issue of corruption, including money laundering, black money explosion, absence of business ethics and poor state of corporate governance, is increasingly taking the centre-stage in the current Lok Sabha election campaign and the Aam Aadmi Party projecting RIL promoter Mukesh Ambani as the fountainhead of corruption, RIL must do something better than merely issuing retractions and denials to allegations against it. The challenge thrown at Ambani by persons of popular appeal such as Prashant Bhushan and Arvind Kejriwal should be regarded as an opportunity by both RIL and the UPA government to establish their credentials by taking these allegations head on. IPA 
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