BackAmazon accuses Future Retail's independent directors of facilitating fraudulent stratagem
The Jeff Bezos-led e-commerce giant has now accused independent directors of Future Retail of facilitating a 'fraudulent stratagem' of transfer of 835 stores to Mukesh Ambani's Reliance Group.
PremiumThe feud between Amazon and Future Retail does not seem to find a resolution anytime soon, and in the latest development, the Jeff Bezos-led e-commerce giant has now accused independent directors of Future Retail of facilitating a "fraudulent stratagem" of transfer of 835 stores to Mukesh Ambani's Reliance Group.
As per a PTI report, Amazon says that 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 ₹250 crore.
On May 19, Amazon in a letter to independent directors of FRL reminded that in a meeting with core lender banks on January 1, 2022, the Future Group's retail arm had "categorically admitted that the unpaid rental dues were ₹250 crore only." Adding that FRL had that time stated that it voluntarily retained the amount.
Accusing the FRL directors, Amazon wrote, "surprisingly, FRL had managed to do so without discontinuing any of its operations or handing over its stores." It further 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."
Last month, RIL cancelled the ₹24,713 crore deal with Kishore Biyani's Group after the secured creditors of Future Retail voted against the scheme. Initially, in the deal, RIL was supposed to acquire the retail & wholesale business and the logistics and warehousing business of Future Group through Reliance Retail Ventures Limited (RRVL).
Amazon has been against Future Group and Reliance Group's deal that was inked in August 2020. As per Amazon, the deal is in violation of its 2019 agreement through which it acquired a 49% stake in FCPL, the promoter entity of Future Retail, for about ₹1,500 crore.
In its letter to the FRL directors, Amazon has pointed out that on January 2, FRL has issued a letter to several lenders namely Bank of India, State Bank of India, and Saraf and Partners, wherein FRL reiterated its stand on selling the small store formats, in blatant disregard of the binding injunctions operating against it. The e-commerce player added, "If the retail stores were not available with FRL, FRL would be incapacitated from making such a statement."
Further, Amazon stated that the purported handover of retail assets of FRL is, thus, not on account of non-payment of outstanding lease rentals.
Thereby, Amazon reiterated in the letter saying, the purported handover is nothing but an intentional fraudulent action in furtherance of the stratagem to ostensibly alienate the retail stores, without following the rule of law. It has been carried out without notice to the Courts, regulators, and lender banks and is solely motivated by the desire to defeat any final award passed in the Arbitration Proceedings in favor of Amazon.
Therefore, Amazon further stated that the stratagem to alienate the retail stores grossly undervalues the retail stores and moreover falls under acts amounting to wrongful trading to defraud creditors. The e-commerce giant alleged that FRL promoters, KMPs, and directors, including independent, are liable for terms of imprisonment under various provisions of law including the Companies Act, 2013.
FRL is yet to shed any light on the development. (With Inputs From Agency)
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