Future Retail denies Amazon’s allegation that it diverted $1.5 billion to other businesses

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Future Retail denies Amazon’s allegation that it diverted $1.5 billion to other businesses
Future Group's Kishore Biyani, Amazon's Jeff BezosBCCL/Bi India
  • Amazon has reportedly alleged that Future Retail transferred $939 million as a capital advance to a company controlled by the founder Kishore Biyani.
  • Another $575 million was transferred into an unusual rental security deposit and advances were made to suppliers.
  • Future Retail says that the transactions were a part of public disclosures made by the company as a part of standard governance practices.
Amazon, which is trying to prevent Reliance Industries from taking over the retail assets of Kishore Biyani-led Future Group, has reportedly made a fresh set of allegations against Future Retail.

The ecommerce giant has reportedly accused Future Retail of diverting $1.5 billion from its account to other companies.

As per a report by Bloomberg, Amazon has alleged that Future Retail transferred 70 billion Indian rupees, which is close to $939 million at current conversion rate, in the financial year March 2020 as a capital advance to a company controlled by the founder Kishore Biyani. This was a payment for the goods and services purchased by the related firm.

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Future Retail said that the transactions were a part of public disclosures made by the company as a part of standard governance practices. There is nothing new that is being brought to notice here, “except for false speculations being created out of selective excerpts,” the company’s representative told Bloomberg.

The ecommerce giant has written, as per the report, to Indian finance minister Nirmala Sitharaman, Reserve Bank of India (RBI) governor Shaktikanta Das, market regulator Securities and Exchange Board of India (SEBI) and several other authorities, seeking an investigation into Future Retail.

The copy of the letter was seen by Bloomberg, which first reported the development.

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Business Insider has shared a detailed list of questions to Amazon and Future Retail. The copy would be updated if and when they respond.

Amazon has also alleged, as per the Bloomberg report, that Future Retail created an unusual rental security deposit and made advances worth 43 billion ($575 million, at current conversion rate) Indian rupees to suppliers in the same year even though its business had slumped and it was shutting down stores.

“Significant amounts may have been diverted from Future Retail…,” Amazon reportedly said, adding that a part of these transactions can help Future Retail immediately repay the outstanding debt owed to banks and creditors.

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The legal battle between Amazon and Future Retail dates back to August 2020, after Mukesh Ambani-led Reliance Retail agreed to buy Future Group’s retail, wholesale and warehousing assets for ₹24,713 crore.

Amazon — which held about 3% stake in Future Retail through its 49% shareholding in Future Coupon — objected to the deal, saying that it had barred Future Group from getting into any retail agreement with 11 companies, including Reliance.

The Supreme Court of India in August upheld the emergency award given to Amazon by Singapore International Arbitration Centre (SIAC), which considered the Future and Reliance deal invalid. The case is still pending before India’s Supreme Court.

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