Reliance paid 2 lawyer-MPs crores in undisclosed retainer fees in perfectly legal but troubling arrangement

Two senior MPs were paid several crore Rupees in undisclosed legal retainer contracts over several years by Reliance Industries, raising questions of transparency and potential for conflict despite being completely legal, reported the UK’s Financial Times on its frontpage this morning.

[Full FT article ‘Reliance payments to Indian politicians raise transparency issues’ accessible after free sign-up].

Senior Congress politician and ex-broadcasting minister Manish Tewari and senior BJP politician Ravi Shankar Prasad were both paid monthly retainers respectively by Reliance and Reliance affiliate Fine Tech Corporate, which were not disclosed to the public by the company or the politicians.

A large number of Indian parliamentarians have flourishing and lucrative legal practices as counsel and are in high demand by corporates for their legal advice. However, according to two experts from thinktanks and academia interviewed by the FT, undisclosed retainers of this nature raised a “very serious problem” of transparency, while in the US such contracts would be banned and under UK law would be permitted only if disclosed to avoid any conflicts of interest.

According to documents seen by the FT, Prasad sent Fine Tech Corporate an invoice for legal services of Rs 84 lakh ($135,506) between April 2013 and March 2014, before he was appointed Narendra Modi’s telecoms minister in May 2014.

According to the FT, Tewari received a total of Rs 1.2 crore ($193,580) from Reliance between June 2010 and 2012 via a monthly legal services retainer, which he asked to be renewed at his request for two years in June 2012, receiving a further Rs 1.44 crore ($232,295). He became information and broadcasting minister on 28 October 2012, but told the Times of India that he surrendered his licence to practice and the Reliance contract two days later.

Prasad and Tewari told the FT that they, as required under the ministerial code, had not done any commercial legal work while ministers but Prasad noted that he had undertaken legal work as an MP “purely in professional capacity, only like a lawyer and client and nothing else”, while Tewari told the FT that although he had complied with the rules, regulations should be changed to ensure such retainers were declared in future “to keep everything above board”.

Reliance told FT in a statement: “RIL has large and varied demands for legal assistance. We work with various lawyers from time to time for such legal assistance. The details of such engagement are contained in our accounts and are available with tax authorities. Several eminent lawyers in India are and have historically been in active politics and have been rendering legal services to leading corporates in India. There is no bar against an elected representative to continue his or her practice while being an MP or MLA. Our selection of lawyers is basis [sic] our needs and their expertise and that has nothing to do with their being in politics or being MP/MLA. As is the common practice and legal requirement, when such an MP/MLA has joined as a Minister in the Union Cabinet, the engagement discontinues. Communication with lawyers are privileged and are protected by the law.”

Coincidentally, the Aam Aadmi Party (AAP) raised the issue yesterday independently, reported PTI

 

Source: http://www.legallyindia.com/201412195452/Bar-Bench-Litigation/ft-reliance-paid-2-lawyer-mps-crores-in-undisclosed-retainer-fees-in-perfectly-legal-but-troubling-arrangement