Sucheta Dalal :Whistleblowers who are too close to hurt
Sucheta Dalal

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Whistleblowers who are too close to hurt  

May 23, 2005

The war between the Ambani siblings has thrown up another interesting whistleblower, whose actions probably merit deeper academic study. This is Akhil Gupta, a close buddy of Mukesh Ambani, who blew the whistle on Reliance Infocomm last week, after moving on to head the Blackstone group’s private equity business in India as senior managing director.

The first ‘whistleblower’ is, of course, Anil Ambani, still officially designated the vice-chairman and managing director. His allegations against the company exposed its shady business practices and secret links with politicians like nobody else would have dared to do. Anil’s many letters, alleging bad corporate governance and violation of various laws and regulations has finally forced the Securities and Exchange Board of India and the ministry of company affairs to investigate his charges. Whether anything comes of these allegations is another matter. It is also difficult to buy into his imputation that all the mischief and rule-breaking by Reliance occurred only after he was sidelined from active management.

Anil’s biggest strength was that he had an inside line on how the group worked. And his weakness, if one could call it that, was that he could not break Mukesh Ambani’s inner circle until a few months before. The first breakthrough happened when he got specific information about Reliance Infocomm having doled out a chunk of equity to politicians. Even as the damage done by those revelations was being hastily patched, it was clear that Satish Seth, a close confidant, had switched sides and had resigned from a series of private investment companies of Reliance. Seth knows too much and the Mukesh camp has clearly accepted his switch with good grace.

 Next came an equally damaging story, contained in the leak of Akhil Gupta’s e-mail to Mukesh Ambani. Gupta had objected to the re-routing of international calls by Reliance Info-comm to avoid the access deficit charge (ADC) and warned of its consequences. Naturally, it would be safe to presume the leak would have severed his relationship with buddy Mukesh Ambani. But in the strange manner that Reliance works, Gupta, too, appears to be a man who knows too much and cannot be hurt.

 Gupta's e-mail reveals that Mukesh Ambani had heeded what turns out to be wrong advice given by Manoj Modi (another key strategist and confidant), over the professional opinion of the former. A subsequent email also discloses that Gupta was seriously upset at what he claims was a whisper campaign by Manoj Modi, blaming him for the ADC fiasco.

 • Akhil Gupta is the latest whistleblower, whose actions merit deeper study

• Whistleblowers are normally harassed, persecuted, intimidated into silence

• Not at Reliance: the Mukesh camp is unwilling to do such a thing

 This is not the first time that Mukesh Ambani has chosen Manoj Modi over experienced professionals. In its initial phase, Reliance Infocomm had scored a major coup by persuading BK Syngal, former chairman of VSNL, to join the group. Syngal also quit due to differences with Manoj Modi, who clearly had Mukesh’s support. Strangely, on the very day that his whistleblowing e-mails were splashed on the front page of a business daily, Gupta was escorting the chairman and managing director of the Blackstone group, along with their wives, to a private lunch with Mukesh Ambani at Sea Wind, the posh multi-storied home of the Ambani family. There was, apparently, no mention of Gupta’s leaked e-mail at the lunch. The only protest came from Neeta Ambani, who refused to play hostess that day.

 Akhil Gupta is such a close friend of Mukesh Ambani that he is the only Reliance executive who lives in a guest apartment at Sea Wind. More important, he continued to live there at the time of writing this column. But then, Sea Wind is Anil Ambani’s home, too, and he could be staying on as a guest of the other brother.

 Akhil Gupta refused to respond to persistent attempts to contact him and the Mukesh camp is also unwilling to make any public statement on what they clearly see as a big ‘betrayal’ (Reliance has, however, issued a half-hearted denial, claiming Gupta’s e-mails are misleading). Why are Akhil Gupta’s e-mails and the leaks by other former employees seen as acts of treachery? It is probably because of Reliance’s style of management, where loyalties and friendships are stretched way beyond professional boundaries, in a manner that is atypical of most other family-run industry houses in India. For instance, nobody working for the Bajaj or Birla group, or who is even friendly with them, has ever been referred to as “being like” the third or fourth son of the family patriarch. Whatever the professional closeness, the lines between family and outsiders have always been clearly drawn.

The manner in which the extended Birla clan has got together to fight RS Lodha’s inheritance of the MP Birla empire is a good example of this clear Laxman rekha. It is only in the Reliance group that Manoj Modi’s personal friendship is counted more than sound professional advice (even when it is clear that the Reliance Infocomm project has been botched by expensive mistakes). Or an Anand Jain is invariably referred to as being like “the third son” of Dhirubhai. Even Akhil Gupta, who probably had relatively little connection with Dhirubhai Ambani, was described by someone as “the son that Dhirubhai never had.”

A consequence of these strange ‘personal-professional’ bonds has turned the whistle-blower concept on its head at Reliance. All over the world, it is almost a given that whistleblowers are sacked, harassed, vilified, persecuted and intimidated into silence. At Reliance, however, an Akhil Gupta can breeze in to lunch with his new bosses without any discussion about the morning media headlines.


-- Sucheta Dalal