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Amazon writes to independent directors of Future Retail, accuses them of 'fraudulent stratagem'
Amazon Future deal
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Amazon writes to independent directors of Future Retail, accuses them of 'fraudulent stratagem'

| @indiablooms | 23 May 2022, 12:16 am

Amazon has written to the independent directors of Future Retail Ltd (FRL), accusing them of facilitating a "fraudulent stratagem" of transferring 835 stores to billionaire Mukesh Ambani's Reliance Retail.

Amazon has accused that the reason cited by FRL for transferring the stores was on account of failure to pay huge outstanding rent was a "sham".

In the letter on May 19, the US-based e-commerce giant said that the firm had in a meeting with core lender banks on January 1, 2022, "categorically admitted that the unpaid rental dues were 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."

"On January 22, 2022, FRL issued a letter to Bank of India, State Bank of India NSE 3.33 % 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. If the retail stores were not available with FRL, FRL would be incapacitated from making such a statement," Amazon said.

"The purported handover of retail assets of FRL is, thus, not on account of non-payment of outstanding lease rentals."

"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, lender banks and solely motivated by the desire to defeat any final award passed in the Arbitration Proceedings in favour of Amazon," it said.

Amazon said FRL had on March 9 stated for the first time that termination notices were issued by entities affiliated to the MDA Group.

"FRL further went on to disclose that at least 835 retail stores (contributing 55% - 65% of the total revenue of FRL) had been purportedly shut down, possibly making way for stores operated by entities belonging to the MDA Group."

"FRL was colluding, and in continuous discussion, with the MDA Group," it alleged. "The circumstances surrounding the purporported surrender of the retail stores by FRL to the MDA Group establishes that the purported 'transaction' was nothing but a guise and a stratagem wrongfully adopted by FRL, with the connivance and collusion of the MDA Group, to purportedly transfer the retail stores."

Amazon accused FRL of devising "a stratagem to purportedly alienate and transfer around 835 retail stores, comprising both large-format stores such as 'Big Bazaar' and small-format stores such as 'Easy Day' and 'Heritage Fresh'" to Ambani's Reliance (MDA Group) "in the teeth of binding injunctions and court orders."

It said the lenders to the retailer rejected sale of assets to Reliance was "a telling fact, and indicates a larger malaise in the manner in which FRL and other associated companies have dealt with constitutional courts, regulators, lender banks, its shareholders and other stakeholder interests."

Amazon said that the independent directors had in January this year dismissed its proposal of financial assistance to FRL citing the then proposed sale to Reliance.

"It now appears that FRL sought to purportedly alienate its retail stores in favour of the MDA Group by any means possible," it said.

"You, as independent directors, have facilitated this fraudulent stratagem to defraud the Indian public and regulators," it alleged.

Amazon accused the independent directors of "gross failure" in performing their statutory obligations and duties.

"Your inaction and material omissions have resulted in the execution of this stratagem orchestrated to commit a fraud by FRL, its Promoters, directors and KMPs on various stakeholders inter alia constitutional Courts, regulators, lender banks and its shareholders in collusion and connivance with the MDA Group," it said.

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