Whistle-blower doctor says Reliance offered settlement money, even as SEBI, MCA stonewalled his complaints
The former medical director of the Dhirubhai Ambani Hospital, in Maharashtra’s Raigad district, Dr Sanjay Thakur was approached by representatives of Reliance Industries Limited in early November 2020, with a settlement offer to withdraw his case of illegal termination against the business house. Thakur was fired in June 2017, a few months after he reported various instances of financial irregularities, mismanagement and corporate-governance failure at DAH, to RIL’s ethics committee. The nature of Thakur’s complaints made him a whistle-blower, and after his dismissal, Thakur further escalated his complaints to the Securities and Exchange Board of India, or SEBI, and other state and central government authorities. Thakur told me that the settlement offer at the end of 2020 was an inducement to withdraw all his complaints, across forums.
Thakur was the medical director of the DAH from January 2015 to 26 June 2017. He first approached RIL’s ethics committee, known as the Ethics and Compliance Task Force, via an email on 19 January 2017. The mail highlighted irregularities and mismanagement of funds, including delays in repairs, purchases, and escalated bills at the DAH, bringing to the fore some of the reasons for the hospital’s steady decline and failure. Over the next few months, he escalated his complaints to senior RIL officials, including Mukesh Ambani. Thakur’s complaints were not addressed and initially, the company transferred Thakur overnight. When Thakur pointed out the legal hurdles in these transfer orders and refused to join, he was fired. Thakur’s wife Vidya was also employed at DAH as a senior medical officer at the hospital’s anti-retro viral, or ART, centre for people living with HIV-AIDS. She, too, was fired soon after Thakur’s dismissal.
There is ample evidence that Thakur’s allegations regarding the functioning of DAH were not unfounded. From 2017 to 2020, multiple inspection reports and communications from the health authorities of Maharashtra, as well as media reports from this period, all confirm that the issues of lack of equipment and staff and overpricing of services persisted at DAH even after Thakur was fired.
Beginning July 2017, Thakur approached SEBI, the ministry of finance, the ministry of corporate affairs, the health department of Maharashtra, as well as the Prime Minister’s Office and the President’s Secretariat. In his complaints to each of them, he listed a series of wrongdoings. These included failure of vigil mechanisms, whistle-blower victimisation, failure to follow the process of disclosure of whistle-blower complaints, and CSR irregularities by RIL, Reliance Hospital Management Services Private Limited, which runs DAH, and Reliance Foundation. The foundation implements RIL’s CSR projects. Subsequently, in July 2018, Thakur challenged his dismissal in a Mumbai City Civil Court.
Thakur said that for over two years, SEBI and the MCA have consistently stonewalled his complaints against the business house. SEBI has closed at least ten complaints filed by Thakur since 2017, while forwarding the sections of his complaints dealing with CSR to the MCA. On the other hand, according to communication between Thakur and the MCA, an investigation initiated by the MCA, in 2018, appears to have not proceeded further while another inquiry started in October 2020 is still ongoing. The documents further reveal that both SEBI and MCA accepted RIL’s responses to Thakur’s complaints without any independent probe and forwarded the same to Thakur. This points to a failure in monitoring and regulating the provisions for whistle-blowers and CSR compliance at one of India’s largest public-listed companies. Barely a month after the MCA’s latest inquiry, Shrinivas Shanbag, the former director of RHMSPL, initiated negotiations for the settlement offer.
“Shanbag reached out to me in November. They have offered Rs 50 lakh for both of us,” to withdraw all complaints and settle the matter, Thakur told me. The Caravan has in its possession screenshots and audio recordings of these and further conversations, which Thakur shared. Shanbag had written to Thakur that he had retired but was bothered that he could not find an amicable solution to what he referred to as “your problem,” and asked to meet. They met in end-November, in the presence of Abhijit More, an activist, the lawyer representing the Thakurs, and a Reliance representative named Arjun V Betkekar. More confirmed to me that Thakur was offered money to “settle everything.” The Thakurs said they refused to accept the terms to withdraw their complaints from SEBI and other forums but are going ahead with the discussion to reach a compensation figure for the alleged illegal termination. When contacted for a response, Shanbag declined to comment.
*
The DAH began functioning in Lodhivali, on the Mumbai-Pune highway, in October 1998 and was started under the leadership of the late Ambani patriarch, Dhirubhai Ambani. It caters to people from around 50 adjoining villages of the area, the staff of RIL’s Patalganga manufacturing division and accident victims on the Mumbai-Pune highway. According to a July 2017 report in the Pune Mirror, local residents claimed that “they had given up their land to the hospital and were under contractual agreement that it would provide employment and free medical facilities to the needy.” The hospital’s ART centre is a public-private partnership programme between RIL, the Maharashtra Aids Control Society and the National Aids Control Organisation.
The RHMSPL was also incorporated in 1998 and has been running the DAH since then. It is private limited company with various Reliance Group companies, such as the Reliance Group Support Services and Reliance Petro Distribution, listed as its promoter shareholders.
Since 2014, the Reliance Foundation—a Section 8 company of RIL—was providing the funding for DAH via RHMSPL. A Section 8 company is one registered under the Companies Act of 2013 with an objective to promote fields such as art, science, sports, education, research, social welfare, religion, charity, and protection of environment. Section 8 companies are non-profit organisations, which can generate profit or income but can only apply these earnings to promote their specific causes. According to the Companies Act and the CSR Rules of 2014, private companies can spend their CSR fund through a Section 8 firm. According to the company’s reports, RIL was transferring CSR funds to Reliance Foundation, which was then sending the money to another Reliance Group company, RHMSPL. RIL has a public shareholding of 49.71 percent while the state-owned Life Insurance Corporation holds 6 per cent of the total equity of RIL.
Thakur first joined DAH as a full-time physician back in 1998, and served there till January 2003. Over the next decade he worked in the United Arab Emirates and Australia. In January 2015, he joined DAH again, as the medical director. His wife, Vidya, had also joined the DAH in November 2014. She had repeatedly raised various issues at the clinic, including lack of staff and facilities and delay in delivery of medicines. She was fired from DAH on 15 September 2017.
Email communication between Thakur and RIL officials, as well as the company’s responses to SEBI and MCA, show that Thakur first reported irregularities and mismanagement of funds, including delays in repairs, purchases, and escalated bills at the DAH, to RIL’s ethics committee on 19 January 2017 via an email. The next day, he reiterated his complaints via a phone call. He told me that in early March, he also conveyed his grievances to Laximidas V Merchant, the chairman of the ethics committee and group controller of RIL, in person.
According to the RIL’s code of conduct, the ethics committee must process and investigate protected disclosures to “look into genuine concerns concerning actual or suspected practices including fraudulent practices, such as improperly tampering with RIL books and records.” The committee is designated by RIL’s Audit Committee to handle complaints and the resolution process. Both the Audit Committee and Corporate Social Responsibility Committee constituted by the board of members of RIL are headed by Yogendra P Trivedi, an independent chairman of RIL. Trivedi is a former Rajya Sabha member of the ruling Nationalist Congress Party in Maharashtra.
The ethics committee’s own code of conduct says it treats “the identity of the whistle blower and the fact that a Protected Disclosure has been made as confidential.” The committee is essentially a tool to comply with SEBI’s Listing Obligations and Disclosure Regulations of 2015. The LODR 2015 is a regulatory mechanism which governs disclosure of information by all public-listed entities. The rules stipulate that a listed company should have an effective whistle-blower mechanism enabling stake holders, including individual employees, to communicate their concerns about illegal or unethical practices.
According to Thakur’s communication with SEBI, instead of looking into the irregularities raised by Thakur, the ethics committee asked him to prepare a turn-around plan with an investment of Rs 3 crore and a business model to increase revenue via an email on 24 February 2017. When I spoke to Thakur in January 2021, he said, “If my complaints were frivolous as they claim why they would propose this?” In addition, Thakur told me that he feared that the process of addressing a whistle-blower’s complaint had been compromised in the beginning itself because within days of his complaint to the ethics committee, Shanbag, a key management person, contacted him via email and asked to meet.
On 21 February, Thakur wrote his first email to senior RIL officials including Mukesh, Nita Ambani and two others. Thakur wrote that there were “significant irregularities in functioning of Finance, Pathology, Pharmacy, radiology, vendor engagements and staff functioning.” Almost a page of the letter has details of these irregularities, such as, the annual maintenance cost was being paid for equipment that was non-functional and the repair of 18-year-old ultra sound machine was pending for over three years. Another page of the letter lists the work done by the hospital in the face of these severe constraints. He also wrote that “audit of finance by KPMG had pointed to glaring deficiencies,” but no step was taken to resolve the issues highlighted by the international auditing firm.
The letter also mentions that he was being pressurised to award a contract for a laboratory to an unlicensed, small lab, bypassing a better-equipped lab. Thakur told me that he decided to pursue this particular issue separately with the government, too. Thakur filed an email complaint with Maharashtra’s department of labour and employment on 9 January 2019. That month, the office of Maharashtra’s chief secretary forwarded Thakur’s complaint to the labour secretary for “necessary action.” The state labour department has not taken any action on the matter yet.
The DAH’s troubles were covered by the media extensively and they point to severe issues with the hospital’s functioning, even after Thakur was fired. Similarly, several state government inspection reports and communications point towards the DAH’s shortcomings.
In July 2017, the Pune Mirror reported that the facility was in a near-defunct state and underprivileged patients from nearby villages were being turned down. The Mirror noted that the ICU unit was locked up, and all the machinery and medical equipment were stacked in a store room. “There was no doctor, but two nurses in the emergency section.” The residents also told the newspaper that while the ART centre received fund for medicines from the government, no one was appointed to run the pharmacy.
In September 2017, the Raigad district women and child development officer inspected the hospital following a complaint by two employees, including Vidya, and wrote to the district collector to look into matter and take necessary action. The report noted that among other shortcomings, the ART centre was functioning with only 54 percent staff strength, there was no medical officer and three out of four counsellor positions were lying vacant. A month later, The Hindu reported issues of thinning staff, lack of adequate medical equipment, and cases of emergency patients denied treatment.
In December 2017, Thakur raised these issues with the Mumbai administration’s director of health services. On 22 December, the deputy director of health services inspected the facility and submitted a report. Once again, the report raised glaring irregularities and lapses in the functioning of the hospital. It said that there was only one physician available who was looking after various departments—including the ICU, in-patient and out-patient sections, and the ART centre—for 24 hours throughout the week. According to the deputy director, the DAH also did not maintain essential documents on land acquired, qualifications and salary details of the employees.
Eventually, in January 2019, the principal secretary of Maharashtra’s public-health department, Prakash Vyas, wrote a letter to the commissioner of family welfare and director of NHM, Anup Kumar Yadav. Vyas’s letter noted that all these complaints had been raised against DAH since 2018, and asked Yadav to look at all the reports and submit a response in two weeks’ time. Yadav did not respond to queries regarding the same.
Subsequently, in March 2019, the Pune Mirror reported that patients were being turned away by DAH, and several irregularities raised by residents amounted to “cheating and violation of Maharashtra medical Practitioners Act and Indian Medical Council Act.” When asked about these reports, a senior former employee of RHMSPL, who did not wish to be named, told me that all these reports were “instigated” by Thakur.
All of this is in stark contrast to RIL’s reporting of the functioning of DAH in its annual reports. In its annual report for 2016-17, RIL claimed that DAH was an “82-bed state-of-the-art hospital catering to the industrial and rural population in the Raigad district of Maharashtra.” It claimed that the patients were “provided free consultation, counselling, investigation and treatment.” Under the CSR expenditure for the year, RIL showed an expenditure of Rs 4.1 crore on the DAH, and a total of Rs 9.6 crore till then.
On 14 June 2017, four months after Thakur reported the issues to the ethics committee and top officials of RIL, he received a transfer order asking him to report for duty at a hospital run by the Reliance Group in Dahej, in Gujarat. He was asked to report there the very next day, and asked to report to Shanbag, the then director of RHMSPL. The overnight transfer order overlooked the fact that as per the Maharashtra Medical Council’s rules, the transfer of medical doctor requires the permission of the Maharashtra Medical Board and registration with the Gujarat Medical Board. When Thakur wrote back and pointed this out, RIL terminated his services, on 26 June 2017.
Thakur filed his first complaint with SEBI in July that year, but the organisation said the matter was not under its purview. In September, he wrote to SEBI again about CSR irregularities, failure of vigil mechanism, whistle-blower victimisation and non-disclosure of complaint. Two months later, SEBI forwarded the complaint regarding misutilisation of CSR funds to the Registrar of Companies under the MCA.
But SEBI did not take any action on the violation of whistle-blower provisions and non-disclosure of whistle-blower complaint. SEBI first wrote to RIL in October 2017. The next month, RIL sent back two responses, which SEBI accepted without any further probe. SEBI overlooked the fact that the RIL’s annual report of 2016-17 did not mention Thakur’s whistle-blower complaint. None of RIL’s subsequent annual reports mention this and the annual reports of 2016–17 and 2017–18 stated that the company had complied with SEBI guidelines, and listed complaints where SEBI has taken action. SEBI did not respond to queries on these.
The 2016–17 report also stated, “During the year under review, no employee was denied access to the Audit Committee.” The LODR 2015 clearly states that the annual report of the company should have the disclosure on details of establishment of vigil mechanism, whistle-blower policy, and affirmation that no personnel has been denied access to the audit committee. The Companies Act 2013, too, under Section 177, mandates every listed company to establish a vigil mechanism for their directors and employees to report genuine concerns and grievances.
The LODR 2015 further requires a company to introduce adequate safeguards against victimisation of persons who use such mechanism, and provide direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. Thakur told me that he repeatedly wrote to SEBI to point out that he had not till date been given an audience before the Audit Committee, in violation of the LODR 2015.
On 7 December 2017, the finance ministry wrote to the executive director of SEBI, SV Muralidhara Rao, to take necessary action and submit a reply. The ministry was responding to Thakur’s complaint, of 21 September 2017, which had been referred by the President’s Secretariat twice, on 28 September and 5 October. After this, on 18 December, SEBI forwarded RIL’s response to Thakur, to which he responded with a point-wise rebuttal.
In its November 2017 responses to SEBI, RIL dismissed the complaints as “an attempt by a frustrated employee” and said that he raised the complaints “after a decision was made by the company to close the DAH.” While Thakur had raised specific instances of financial irregularities and mismanagement in his complaint, RIL wrote that his February 2017 letter to Ambani was “vague and did not contain specific instance of malpractice or corruption.” But then goes on to say that “the issues raised by Sr. Sanjay Thakur should have been handled by Sanjay Thakur himself, as he was the head of the Hospital.”
In his rebuttal to Reliance’s response, Thakur had pointed out that “attempts to address issues at DAH were blocked cleverly by various approval processes quoted to me as state in my email.” In his first letter to the management of RIL in February 2017, Thakur had stated that he was being misguided about the approval processes and had cited an example where “even the budget for last year was not approved yet and new budget is being proposed now without any discussion with me.”
According to RIL, its Business Integrity team had visited the hospital and found the complaints to be “frivolous and unsubstantiated.” RIL further claimed that the ethics committee discussed the matter at a meeting held on 10 October 2017—three months after terminating the service of Thakur—and also concluded that the complaint was “frivolous, non-specific and no further action was needed.” RIL claimed to have followed the whistle-blower policy under the LODR 2015.
In his rebuttal, Thakur pointed that RIL’s response had falsely claimed to have sent the ethics committee report. According to Thakur, the decision to close to DAH was never conveyed to him formally and neither were the appropriate authorities notified about the hospital’s closure. The RIL’s claim is also in contradiction to The Hindu report, which said, “A Reliance Industries Limited spokesperson told The Hindu that no formal decision has been taken on the closure of the hospital.” SEBI did not respond after the rebuttal send by Thakur.
Upon feeling that his complaints were being stonewalled, Thakur reported the failure of the SEBI officials handling the complaint to the Central Vigilance Commission on 4 April 2018. After examining Thakur’s complaint, the CVC forwarded the complaint to the Central Vigilance Officer or CVO of SEBI, Aarti Chhabra Srivastava, who took charge in November 2018, for necessary action. The Commission wrote that the CVO should scrutinise the complaint and “decide if any action is required” within a month. Despite the CVC’s directions, Thakur did not get any response from Srivastava. Srivastava did not respond to queries regarding Thakur’s case.
From 2017-20, Thakur filed ten complaints on the SCORES portal—the SEBI Complaints Redress System, which is an online platform for investors to lodge complaints against listed companies. All ten were closed by SEBI. Thakur reported SEBI’s inaction to CVC thrice, which further directed the CVO SEBI to take necessary action, but Thakur did not get any response from the CVO SEBI. During this entire process, Thakur consistently wrote to the finance ministry, the PMO and the President’s Secretariat. Several official memorandums from the finance ministry and the MCA show that, based on references from the PMO and the President’s Secretariat, these two ministries had directed SEBI to look into Thakur’s complaints. However, SEBI ignored all of Thakur’s rebuttals to RIL’s submissions and forwarded RIL’s response to the PMO, the MCA and the finance ministry and said that it had looked into the matter and taken action.
Adwait Dahale, from the compliance and monitoring division in SEBI’s corporation finance department, submitted an action-taken report on 17 June 2020. He wrote, “allegations regarding victimization as a whistle blower were taken up and it was found that RIL has followed the processes as per the Whistle Blower policy and complied with provisions pertaining to Vigil Mechanism.” Based on RIL’s responses to SEBI, Dahale further wrote that “prima facie no violations” of the LODR 2015 was found. He wrote that SEBI had already replied to the repeat complaints and asked Thakur to follow up with the MCA on the CSR fund misuse.
In the midst of this, in March 2020, Facebook announced its plan to invest in the Reliance Group’s digital business unit, Jio Platforms Limited and by June, it had invested Rs 43,574 crore for a ten percent stake in Jio. Thakur alerted Facebook’s legal team about his pending complaints of CSR irregularities, whistle-blower victimisation and corporate governance failure, in March and followed up with an email on 15 May. The Facebook legal team had sought Thakur’s consent on 26 May to forward his complaint to RIL for its response. Notably, on 9 June, SEBI closed Thakur’s November 2019 complaint on the SCORES portal.
Undeterred, on 31 August 2020, Thakur again approached the DEA to protest SEBI’s inaction. “SEBI has thus far blindly accepted RIL’s denial response,” Thakur wrote to Rosemary K. Abraham, the director of DEA. His letter noted that the timing of SEBI’s closure of his complaint in June 2020 was “ample evidence of backchannel activity involving RIL and SEBI after Facebook took cognizance. An impartial probe will surely unravel SEBI insiders nexus to give a clean chit to RIL.” Thakur did not get any response to this letter and Facebook’s legal team also did not respond after this. Facebook did not respond to queries regarding Thakur intimations.
While SEBI dealt with the whistle-blower aspect of Thakur’s complaints, the regulator forwarded his complaint about CSR irregularities in DAH to the MCA. According to a letter from the compliance and monitoring division of SEBI’s corporation finance department, this was done via a letter on 8 November 2017. In December 2018, the MCA issued an office memorandum stating that the complaint was on “serious corporate governance issues and CSR irregularities.” Seema Rath, who was the deputy director of MCA’s CSR cell, then wrote to RIL on 12 December 2018. Rath directed RIL to furnish certified reports with documentary evidence on funding, operations and revenue model of major projects under CSR, including the DAH, HN Reliance Hospital Foundation and Research Center and Jio University, since 2014-15, within 30 days.
In June 2019, the MCA again sent a notice to RIL on the violation of CSR rules, according to a report published in DNA. The report noted that the company had recorded a CSR expenditure of Rs 2,816 crore from 2014 to 2018 but it was “being seen as business expenditure and not CSR.” It quoted the MCA notice, “Prima facie you appear to be in violation of provision of Companies Act 2013, as use of CSR as a source of funding an existing business is not permissible.” The report said that the MCA was looking into the company’s CSR expenditure of Rs 1,739 crore spent, of which Rs 1,141 crore was spent on HN Reliance Hospital Foundation and Research Centre, Rs 8 crore on DAH and Rs 590 crore on the Jio University.
The report further said that the MCA had found the company’s earlier response to it “not satisfactory.” It warned that “a final opportunity is being accorded to … explain your compliance of CSR provisions … and are requested to appear for a hearing on the matter in person, to demonstrate through legal documents how the prescribed CSR amount has been spent and CSR compliance had been made.”
On 19 June 2019, the Bombay Stock Exchange sought a response from RIL on the news report. Six days later, in a misleading response, RIL said that MCA has been seeking information on company’s CSR from time to time and “it has recently sought additional information on CSR projects and the Company is in the process of providing the same to MCA.” In response to our queries, a Reliance Foundation spokesperson wrote saying, “We would like to state that our Company has duly complied with all the requirements of various statutory provisions related to CSR under the Companies Act, 2013 read with the Companies (CSR Policy) Rules, 2014).” The spokesperson added, “We iterate that the allegations levelled by Dr. S.S. Thakur are baseless and defamatory It is obvious that his emails have been addressed with ulterior, motivated and mala-fide reasons and purely as a counter blast to the decision taken due to his termination of employment.”
On 15 June 2020, the PMO again referred Thakur’s letter to the finance ministry based on which the ministry issued an office memorandum dated 7 December asking the MCA to take necessary action. In December 2020, Vedant Ojha, an assistant director at the MCA, wrote to Thakur to inform him that he had been appointed as an inspector under sub-section 4 of section 206 of the Companies Act, 2013, to examine CSR compliance of RIL. According to this, if the registrar is “satisfied on the basis of information available” that the company had “fraudulent or unlawful purpose” or conducted business not in compliance with the act, an inspector is appointed to probe the matter. It gives the inspector powers to call for information and documents.”
However, two weeks later, Ojha wrote to Thakur that his complaints contained “mostly media articles and also the content of mail are generic in nature. All these does not provide specific instances of violations of provision of CSR.” In his reply, Thakur wrote that as per the law the inspector was expected to procure audit reports from RIL, RF and RHMSP, and “promptly call a hearing, record my statement, summon RIL RF RHMSPL officials procure call records” to ensure due process was followed. According to documents shared by Thakur, on 30 March 2021, the registrar of companies—an office under the MCA which deals with the administration of companies—forwarded Reliance Foundations’ response to the allegations regarding CSR irregularities, to him. The Foundation’s response reiterated the same points as mentioned in RIL’s response to SEBI in November 2017. But Thakur has not yet got a response from Ojha, and the MCA did not respond to any queries regarding Thakur’s complaints.
On 12 November, less than a month after Ojha was assigned to Thakur’s complaint, Shanbag first reached out to Thakur. According to screenshots of the conversations, following the first meeting between the Thakurs and Reliance’s representatives, Shanbag again wrote to Thakur on 18 December, and said that he was disappointed they could not take the discussion forward. He advised Thakur to settle on a reasonable figure instead of getting involved in a long-drawn struggle. Shanbag offered to meet again, alone. Shanbag reiterated this offer on 22 January and the Thakurs met him again on 25 January.
The Thakurs, however, have refused to accept the terms to withdraw all complaints. In addition, they said, the compensation offered was lower than the figure arrived at by Thakur’s lawyers. Thakur told me, “Whatever they offered was not in line with the letter communicated to them by my lawyer… what is normally awarded in terms of legal precedent which would include dues, damages, loss of reputation etc.” The next hearing of their case in the civil court was scheduled for 16 April 2021, but has been deferred as courts are on leave due to the ongoing COVID-19 crisis. When I spoke to them in the first week of February, they said their demands were the same as they had been for years—desist from shutting down the DAH, update its infrastructure and equipment, and manage DAH is a fair, accountable and transparent manner.