Companies

Amazon writes to Piyush Goyal countering CAIT’s allegation on legal expense

Forum Gandhi Mumbai | Updated on October 01, 2021

Says “legal and professional expense” line item includes substantial non-legal expenses

Amazon Seller Services Private Limited has written a letter to Piyush Goyal, Minister of Commerce and Industry, clarifying its stance on the alleged legal expense it has incurred in India.

Amazon, in its five-page letter sent on September 28, said Amazon India Limited is not connected with Amazon’s Indian subsidiaries. The American online retail giant said its legal fees did not amount to ₹8,546 crore during FY19 and FY20, countering claims by one of the traders’ body.

Legal expenditures

“There have been, however, recent statements made by anonymous sources in the media regarding the size of the company’s legal expenditures that are inaccurate and that we feel are important to address,” Amazon clarified. A copy of the letter was reviewed by BusinessLine.

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The Confederation of All India Traders (CAIT) had stated that Amazon had spent 20 per cent of its overall revenues towards legal expenses during FY19 and FY20 while referring to data from the Ministry for Corporate Affairs. It had also written a letter to Goyal regarding the same.

However, Amazon said that its financial statements during the stated periods convey that legal expenses in fact constitute a minuscule part of the overall expenses.

Misunderstanding of filings

On the other hand, last week, media reports alleged that Amazon’s India operations spent a combined ₹8,546 crore in “legal fees” during 2019 and 2020.

“In making these claims, the articles cited “public account filings” made by Amazon. We immediately issued a statement clarifying that the quoted amount was inaccurate and appears to stem from a misunderstanding of those same filings, in particular a “legal and professional expense” line item that includes substantial non-legal expenses,” Amazon said.

In its statement, Amazon disclosed that the actual legal fee expenses for the fiscal year ending March 2020 was approximately ₹52 crore, “a fraction of the amount alleged in the media,” it added.

Amazon India Limited

Amazon further clarified that media reports also incorrectly suggested that an entity called “Amazon India Limited” is an Amazon subsidiary and have improperly attributed its legal expenses to Amazon.

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“Amazon India Limited is neither an Amazon subsidiary nor connected with Amazon in any way. Its legal expenses, therefore, are unrelated to Amazon,” it said.

The company also attached a list of shareholders of Amazon India Limited, as is publicly available with the Ministry of Corporate Affairs. According to this list, Amazon India Limited is owned by two real estate entities — Parsvnath Developers Limited and Aadharshila Contractors Private Limited.

Published on September 30, 2021

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