RIL embezzlement

I was surprised to hear about fraud and embezzlement accusations that have been raised against reliance group of companies (both Mukesh and Anil) recently.
The most celebrated one being the 51 page report from the Canadian research firm Veritas analyzing Reliance Communications and RIL. He has highlighted various instances (with factual data) of accounting fraud and suspicious issue of share/ownership. Please google and try to go through a copy of this report. (I don’t have distribution rights)
Then Firstpost (TV 18) took a dig against Reliance Ports and Terminals (RPTL) and Reliance Gas Transportation and Infrastructure (RGTIL). Both firms are privately owned and have a bare minimum equity capital of 5Lakhs (lowest possible as per govt regulations). Yet for their operations they have secured over 3,500 Crore debt (and bank guarantees) from RIL. Also not to mention lucrative long term contract with RIL to ensure steady revenue. Hence effectively all the risk of ownership/non-performance is transferred to RIL while the gains would be cornered by Mukesh (who has invested a bare minimum 5 Lakhs into the company).
Have you ever wondered why all of a sudden everybody is after Reliance?
Well answer is simple Reliance Industries was founded with almost no capital from its legendary founder. Over the years through IPO/FPO, mergers, convertible debentures (both public and private) the equity base has grown substantially. So the only way the promoters could preserve their ownership and position in the board was by secretly and clandestinely issuing shares to itself and almost zero costs.
Interestingly most people are aware of this fact, but till recently they did not care. Simply because, RIL traditionally made a lot of money for its common stock holders. So who cares how much the Ambanis make as long as you were getting more than you had dreamed off. However over the past 10 years the stock has consistently under-performed and Ambanis haven’t stopped fudging their books of accounts. Hence the public outrage.
BTW if you still believe that there is some element of truth in Reliance’s financial statements, then consider this:
One of the basic elements of corporate governance is having your books scrutinized by independent auditors. Although Satyam and PWC fiasco has proved that even the Big 4 auditors are not entirely an unbiased and shareholder friendly, but still Reliance has taken it totally different extremes.
Reliance auditors work *exclusively* for RIL and till recently operated out of Reliance Industries’ premises.
Don’t believe me, then check out: and These auditors need to work hand in hand with the promoters in order to bring food to the table.