Over the decades, Reliance and the Ambanis came to be feared and seemed to be fearless

Reliance industries (RIL) will be around 10, 20, maybe a 100 years from now. As will Reliance Infocomm and Reliance Energy, or whatever names the three companies go by then. Irrespective of ownership, there's a good chance that the Reliance companies constitute the largest business empire in this country then, so this article will refrain from travelling down the path taken by others that shrilly insist that the all-too-public fight between the Brothers Ambani is not good for business.

It is far from that. A vertical split of the refining, petrochemical and petroleum-retailing businesses could render any or all of the three uncompetitive, and will, ergo, not be preferred by either of the brothers; even a court-battle is unlikely to result in that. A convenient division that sees Reliance Energy going to one brother and the gas business to another could hurt the former's prospects; then, Reliance Energy is a very small part (2.82 per cent in terms of enterprise value and 3.59 per cent of revenues) of a whole that, in terms of revenues, accounts for 3.5 per cent of India's gross domestic product (GDP).

Actually, the fight that is being played out through the media-either brother has yet to take legal recourse-is good for business, that is, companies other than Reliance and the business environment in general.

xIt is good for other companies because Reliance's famed lobbying power is certain to diminish whichever way the current war of attrition ends. Recent revelations about Reliance Industries' investments in subsidiary companies and the way a privately-held company, which is a subsidiary of a publicly- listed one, arbitrarily awarded one of its promoters with sweat equity (a move that has since been annulled, probably because it received so much play), have thus far been ignored by the Department of Company Affairs and the Securities and Exchange Board of India (SEBI), but will surely provoke a delayed reaction (hint: a public interest litigation, PIL, by a shareholder in RIL would be all that is required). Already, the buzz in Delhi goes, politicians and bureaucrats are striving to distance themselves from Reliance. And there is more to industry today-think tech trio TCS, Infosys and Wipro, pharma hothouses Ranbaxy, Dr. Reddy's and Cipla, a resurgent Tata Group, a globalising Aditya Birla Group, telco Bharti Tele-Ventures, universal bank ICICI Bank-than just Reliance and the public sector.

It is good for business in general because it raises questions about the role of independent directors, the investments of a publicly-listed company in its unlisted subsidiaries, and the use of a web of investment companies by promoting families to hold and control their stakes in companies. The last is not as innocuous as it sounds. Indian stock markets mandate that companies only need to disclose the holdings of those entities allied to the promoters that hold a stake in excess of 1 per cent in them. A family that has a few hundred investment companies that hold a stake less than 1 per cent in any of their companies can use them to buy and sell shares in the same companies, leveraging insider information to good effect.

And, it is good for business in general, because this spat and the revelations about the way Reliance operates that have already been made (why, for instance, should the company not disclose the fact that an entity bid for, and acquired, a substantial number of shares in ONGC, until news of the holding is leaked to the press?) will force everyone, including this magazine, to get tough with business. Indeed, most of the announcements made by Reliance after its December 27 board meeting are in the nature of explanations for its activities; made proactively they would have constituted good governance practices; coming as they do now, they look like excuses.

Up until the mid-1990s, Reliance-bashing was considered an honourable occupation among Indian journalists. To be sure, Reliance provided enough opportunity to be bashed by the press. Long before corporate governance (or misgovernance) became a fashionable phrase, Reliance was accused of all manner of irregularities and corporate misconduct in its operations, ranging from charges of raising funds from the public twice for the same project to duplication of its own share certificates. In the pre-liberalisation era, there was more: Reliance was accused of unfairly influencing India's trade and industry policies to benefit itself and hinder its rivals. Of course, all companies lobby to do just that, but Reliance's size and clout made it different. Over the decades, Reliance and the Ambanis came to be feared and seemed to be fearless. The company could get away with anything. Dhirubhai Ambani's celebrated fight with Bombay Dyeing's Nusli Wadia, which raged all through the 1980s, also happened to include allegations of an attempt to murder! And although the media-at least through the 1980s and till the mid-1990s-seized every opportunity to focus on this noir side of the Ambanis, invariably the trail would run cold sooner than later. No matter how big or serious the allegation against the Ambanis, the charges never stuck and things eventually rebounded back to normal.

All the while, the group grew. In the post-liberalisation years, the charges of misconduct against Reliance too dropped in number. With less government red tape and controls to deal with, that was perhaps natural.

After liberalisation, the nature of business journalism also changed. Attribute it to western influences if you will, but suddenly the Indian industrialist, entrepreneur or chief executive officer (CEO) was a (rock) star to be adulated and admired. Reports and articles about CEOs became nearly hagiographical in nature, with all their warts and shortcomings glossed over. Little or no attempt was made to investigate corporate misgovernance at companies and groups, including Reliance. Sometimes, this was because of cynicism born of the opinion that Big Business could get away with murder. At other times, it was the sheer opaqueness of the way in which Indian companies (including Reliance) were structured. Very little information was available in the public domain and even stock exchanges and corporate regulators had to go by information that the companies themselves provided. Sometimes it was just convenient not to do otherwise. Legions of equity analysts and investment banks have "researched" the Reliance group. But how is it that no one has tried to investigate how the Ambanis have controlled their shareholding in Reliance Industries? Why is it that it is only now, after the brothers have fallen out and information is being selectively leaked, that we know about a maze of hundreds of companies that form the architecture of ownership of Reliance?

In the months to come, editors, regulators, analysts, bankers, consultants and policy-makers will mull over these questions. They may do something (digitising all information in the various Registrar of Companies, roc, offices spread across the country and making it available online to anyone for a small fee could be one of things they could consider). Or they may choose not to. Either way, this, ladies and gentlemen, is the end of Reliance as we know it.