New Delhi, Nov 9 : The Small Shareholders Welfare Association has asked Lalita Gupte to disclose the “true reasons” for her resignation as an independent director of Vedanta.
In an open letter to Lalita Gupte through a blog for the Small Shareholders Welfare Association, Arun Goenka wrote, “Madam, you were our representative on the Board, you owe it to us.Please give us the true reasons for your resignation.We have stopped expecting anything from other so called Independent (sic) Directors.No so called independent director of the company has your spine and uprightness to let go such huge personal benefits that too post retirement.
“We were assured that with Mrs.Lalita Gupte on the Board, she will protect our interest, she is the torch bearer of corporate governance.
“Your silent resignation will only propel the Vedanta promoters and its Board to even more blatantly violate corporate governance norms.
“Will your conscience allow you to let your massive sacrifice go to waste without achieving the result, it set out to achieve? Protection of small shareholders can only be achieved if you make the public announcement of your reason for resignation.”
“We were shocked to learn of your resignation from Vedanta Limited as Independent Director and Chairman of the Audit Committee,” Goenka said.
He further said, “The company release attributed this to ‘balance your work and other family commitments’.We find this hard to digest, considering the following:
(a) In FY 19-20, there were just 7 meetings of Vedanta Board and Audit Committee(b) The Company was paying you an excellent sum of Rs.85.50 Lacs(c) You have not resigned from any other company(d) You were only nine months away from completing your second and final term as Independent Director of Vedanta
“The above suggests that there is more to your resignation than meets the eye.This kind of act of kicking such a hefty sum for relatively low amount of work is only done when conscience comes into play and when things make a person uncomfortable,” Goenka said.
“As Independent Director, your primary fiduciary duty was to the minority shareholders and you owe it to us to tell us the real reason for your resignation, else your sacrifice will go in vain.You have alert Finance Ministry, MCA, SEBI, Stock Exchanges and all the small shareholders.You have to also alert the Big Daddy -LIC that the company which they valued at 320 per share is almost at 70% discount because of the poor corporate governance,” Goenka added.
“Was it the $956m inter-corporate loan by Company to its parent company?” was the question posed to Gupte.
If so, was it that it was a FEMA violation to give an inter-company loan to below investment grade company overseas.
It was a diversion of funds from a public company to the promoter’s hands.It was given at a nominal 7 per cent pa when G-Sec rates are at 5.85 per cent pa (while the promoter borrowed at 13 per cent pa when 12 million USD Libor is at 0.33 per cent) i.e.given at rate other than arm’s length, the blog said.
It added that even the auditors have qualified their audit report stating that there are “inherent uncertainties caused by the fact that the parent company has reported a material uncertainty relating to its going concern…” and hence expressed their inability to comment on the fair value of the loan asset.In simple words, the loan may never come back.
Goenka has asked Gupte was it that the company violated its own board approved dividend policy of upstreaming entire dividend of HZL to its shareholders.
So far, Vedanta has up-streamed only 22 per cent of the dividend received from HZL.Vedanta Chairman Anil Agarwal publicly calls dividend pay-out its 50 per cent public shareholders, as leakage.
“Were there other issues of compliance, governance and audit that compelled you to resign? Or were you asked to resign? Or did you resign due to other differences? Surely, being an independent director for over 5 years and the Chairman of Audit Committee, you would have insights into all the wrongdoings of the company,” the blog said
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