Corporate espionage won’t impact RIL, ADAG, Essar, Cairn India & Jubliant Energy investors

Millions of investors of the five energy companies, which have been dragged into the corporate espionage scandal, are unlikely to be impacted by it.

Last week, the Delhi Police arrested five officials of energy companies that include RIL, Reliance ADAG, Essar, Cairn India and Jubliant Energy for theft of confidential documents related to both Coal and Oil Ministries.

While these companies have not been named in the First Information Report (FIR) filed by the Delhi Police, if investigated, could have serious repercussions on both the company as well as the Board.

“For the authorities to investigate the companies, they have to first establish that the officials involved were acting on behalf of the Board and not for personal benefits,” said corporate lawyer Sameer Chaudhary, partner, Sastra Legal.
However, he pointed out that it would be difficult for the agencies to prove any collusion between the officials and the companies as concrete evidence would be required.

“The companies could be booked under the Official Secrets Act (OSA), if it is proven. Nevertheless, I am sure that the angle of investigation would be to check, who is the beneficiary and that's how the needle of suspicion would point towards the board as well,” added another corporate lawyer, Ajay Brahme, founder of Ajay Brahme & Co.

Apart from these sections, the Corporate Affairs Ministry too could begin a suo-moto probe by invoking Section 210 under the Companies Act, 2013, “However, it is very distant right now. We have to remember that the investigating agencies will have to first prove that the information leaked was benefitting the companies,” noted Chaudhary.

While Chaudhary noted that the companies can be barred by market watchdog SEBI if the investigation becomes more conclusive, market analysts believe that the firms cannot be barred from trading in the capital market.

“SEBI can take any action, like it did with realty giant DLF, only if there are violations of the securities law. However, I do not believe that in a case such as this, the regulator can do much,” stated P Phani Sekhar, senior fund manager of Karvy Stock Broking.

Interestingly, the entire controversy has not impacted the performance of these companies in the market. “We do not see any particular trend in the market as far as these firms are concerned. The companies are performing in line with the expectations,” added Sekhar.

While it may be speculative at the moment, what remains to be seen is whether the NaMo government, which is considered to be close to India Inc, intends to take it forward seriously.