IN A country full of both ambition and frustration, Reliance Industries is a “role model for all Indians who dare to dream,” says its boss, Mukesh Ambani. The company certainly has much to boast of. It is hugely profitable, earning more than any other private Indian firm. It is brave, going where others fear to tread, constructing refineries, drilling for oil and gas, building supermarkets and broadband networks. It invests more in India and pays more corporation tax there than any other firm. Without Reliance, which generates 15% of the country’s exports, the balance of payments would be a wreck.

Yet in other ways, Reliance is a rotten role model for corporate India. When it comes to governance this secretive and politically powerful private empire is not a national champion but an embarrassment.

The father of Indian capitalism

Reliance’s culture reflects its roots. In the days before India liberalised its economy in 1991, the firm’s founder, Dhirubhai Ambani, fought his way up from a menial job in Yemen through Mumbai’s heaving tenements to the top of Indian business. Socialist dogma and meddling officials were his foes, charm and cunning his tools. He managed to run rings around the country’s stifling rules. Dhirubhai’s tactics appalled India’s establishment. But he marshalled resources to create industrial facilities of the kind every economy needs, including one of the world’s biggest refineries in Gujarat, his birthplace.

India is a more open place now and Mukesh Ambani—the country’s richest man, worth $23.5 billion—is a more cosmopolitan figure than his father. He studied in America, funds think-tanks and was a director of a Wall Street bank. Yet he has maintained two family traditions. One, making big bets on India, is welcome. Reliance is in the midst of a $30 billion investment plan. Dhirubhai’s other legacy, poor governance, is not.

Reliance is a patriarchy with a lightweight board (see article). Although a listed firm, it makes payments equivalent to a quarter of its pre-tax profits to related entities, mainly privately held by the Ambani family. Its ultimate ownership and beneficiaries are obscured by a mesh of holding vehicles that India’s securities regulator says it does not fully understand. The regulator accuses the firm of making illegal gains from trading derivatives linked to its own subsidiary’s shares (an accusation Reliance is contesting). Some foreign investors, put off by the lack of transparency, shy away.

Reliance’s relationship with the government is even more troubling. Anti-corruption campaigners claim Mr Ambani is the power behind the throne of India’s political leaders. Politicians, officials and regulators say Reliance has unusual clout. Reliance denies these claims. Meanwhile, the national auditor is investigating a telecoms-spectrum auction the firm won.

In 2010 it seemed that Reliance might be changing. Mr Ambani bid for LyondellBasell, a global chemicals giant. The deal would have both made Reliance a killing and forced it to modernise its governance, but it fell through. Since then the company’s culture has become even more personalised. In June Mr Ambani’s wife joined the board. In July Reliance took control of a big broadcaster, which will provide Mr Ambani with a platform for his views, should he choose to use it that way.

Mr Ambani seems to believe that Reliance does not need to reform. He is wrong, for two reasons. First, India’s economy is opening up, and the firms most exposed to global competition—tech giants, for instance—have the world-class governance and open cultures needed to command the trust of counterparties, investors and clients, to attract talent and to foster innovation. Asia’s best multinationals, such as Samsung and Lenovo, have had to make painful reforms to stay competitive. Reliance operates in the more opaque parts of the economy, such as infrastructure, that are trapped in a time warp of barons and scandals. But to revive India’s growth rate, Narendra Modi, the new prime minister, will probably expose these sectors to a blast of competition and investment from abroad. The more open the economy, the more of a liability Reliance’s opacity and bad reputation will become.

Second, Indian society is turning against its tycoons. Independent institutions such as the Supreme Court, the national auditor and the central bank are on the warpath against crony capitalism. The electorate is incensed by corruption. Mr Modi may be beholden to the businessmen who bankrolled him, but the voters want him to tackle cronyism. In this climate, Reliance’s power makes it vulnerable. Already, officials are raising awkward questions about its gasfields. Whereas Dhirubhai Ambani was mobbed by adoring crowds, Mukesh, protected by gunmen, is criticised on Twitter. Pervasive mistrust is dangerous for any firm. In the early 20th century Americans demanded that big businesses such as Standard Oil be broken up; today, Mexico’s richest man, Carlos Slim, is under pressure to shrink his empire.

Taking the plunge

There is plenty that Mr Ambani could do to reform his firm. He could adopt global accounting rules, reveal and simplify its ownership and appoint as directors global heavyweights with reputations to lose who can subject Reliance to scrutiny. The company’s shares—like those of many Asian firms—could be listed in America, which has the world’s toughest disclosure regime. To avoid conflicts of interest Mr Ambani could merge his private businesses into Reliance, on terms that are fair to minority shareholders. He could publish details of Reliance executives’ meetings with politicians and officials. He could sell its media assets. He would lose something in personal and political power but gain more through the opportunity to build a more global and more admired business.

There is a contradiction at the heart of Reliance. The firm purports to represent the new India—less deferential, better educated, less corrupt and powered by technology—but runs itself according to the old rules of opacity, hereditary power and political influence. If Mr Ambani is to become the great business leader he wants to be, he needs to let Reliance’s progressive side overpower its darker one.