21 March 2005 05:52 [Source: ICIS news]
SINGAPORE (CNI)--The Indian government has ordered the Securities and Exchange Board of India (SEBI) to investigate possible securities law violations by Reliance Industries, according to a Financial Times report over the weekend.
Reliance Infocomm, a Reliance subsidiary controlled by Mukesh Ambani, was alleged by the government to have sold 10m of the company shares at a nominal price of Rs1 per share to Ashish Deora, a business partner of close relatives of Pramod Mahajan, India's former telecommunications minister.
The shares, which amounted to about 3% of the company's equity, were valued at Rs250 per share. Mahajan denied any knowledge of the equity transaction.
The report also quoted a Reliance Infocomm statement as saying that the shares were sold to Deora as an "equivalent" performance-related payment for his services in assisting the company's broadband investment project in Mumbai.
The telecommunications company said that the shares were returned by Deora since he "had been unable to fulfil his commitment."
The report said that the inquiry could also affect India's growing shareholder culture at a time when foreign investors have helped push the share prices on the Bombay Stock Exchange (BSE) to record highs. It also said that one in four BSE investors was a Reliance shareholder as Reliance made up 13% of in the BSE Sensex.
Reliance Infocomm is India's largest mobile service provider with over 9m customers. A Reliance Industries spokesman declined to comment on the Reliance Infocomm share sale report.
Meanwhile, the fight over ownership issues in Reliance Group between Mukesh and Anil Ambani remains unresolved.
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