Anil Ambani loan fraud
The Enforcement Directorate (ED) executed raids at over 35 locations associated with Anil Ambani’s Reliance Group on Sunday. This operation commenced on July 24 and continued for three days. Approximately 50 companies were involved in the raid. More than 25 individuals were also questioned.
Reliance Group companies, Reliance Power and Reliance Infrastructure, communicated this information via an exchange filing on Sunday. Both companies notified the stock exchange that this operation will not impact their business, financial results, or shareholders.
As per media reports, the raids were carried out in Delhi and Mumbai related to a loan fraud case involving 3000 crore rupees borrowed from Yes Bank. These actions were taken under Section 17 of the Prevention of Money Laundering Act (PMLA).
According to PTI, this operation was based on two FIRs filed by the CBI and information gathered from various agencies including SBI, National Housing Bank, Bank of Baroda, and the National Financial Reporting Authority (NFRA).
Statement from Reliance Power and Reliance Infrastructure
The company has declared that the Enforcement Directorate (ED) has completed its actions in all areas. The company and its officials have fully engaged with the authorities and will continue to do so going forward.
This ED action does not impact the business, financial outcomes, shareholders, or employees of the company. The action pertains to allegations involving transactions from over a decade ago related to Reliance Communication Limited (RCOM) or Reliance Home Finance Limited (RHFL).
Anil Ambani is not a member of the board for either of these companies, hence any actions regarding RCOM or RHFL will not influence their operations, management, or shareholders. Reliance Power and Infra operate as a distinct and independent listed entity with no financial ties to RCOM or RHFL.
What prompted the ED to take action against Anil Ambani’s group?
The issue revolves around approximately 3,000 crore rupees in loans extended by Yes Bank to entities linked with Anil Ambani’s Reliance Group during the period of 2017 to 2019.
The initial findings from the ED’s investigation suggest that these loans were purportedly funneled to fraudulent companies and various units of the group. It has also been revealed that senior officials from Yes Bank may have received bribes.
What additional information has emerged from the ED’s investigation?
The ED has characterized this as a “well-planned and premeditated” scheme that misled banks, shareholders, investors, and other public institutions to embezzle funds. Numerous inconsistencies were found during the investigation, including:
- Loans issued to companies with inadequate or nonexistent verification.
- Shared directors and addresses among various companies.
- Absence of required documentation for the loans.
- Funds being transferred to fictitious firms.
- The strategy of granting new loans to settle existing ones (loan evergreening).
What is the CBI’s involvement in this case?
The CBI has filed FIRs in two separate cases concerning loans provided by Yes Bank to Reliance Home Finance Limited and Reliance Commercial Finance Limited. In both instances, former Yes Bank CEO Rana Kapoor has been named by the CBI.
An official later mentioned that other agencies and organizations, such as the National Housing Bank, SEBI, National Financial Reporting Authority, and Bank of Baroda, have also shared their findings with the ED, which is now probing the matter.
What effects did the raid have on Anil Ambani’s companies?
Following the raid, the stock prices of Anil Ambani’s major companies, Reliance Infrastructure and Reliance Power, dropped by as much as 10% within two days.
What other accusations exist against Anil Ambani’s companies?
Recently, the State Bank of India labeled Anil Ambani’s firm Reliance Communications and Ambani himself as “fraud.”
SBI claims that RCom misused a loan amounting to 31,580 crore rupees taken from the bank. Of that total, around 13,667 crore rupees were utilized for settling loans of other companies, while 12,692 crore rupees were transferred to other entities within the Reliance Group.
SBI also indicated that they are in the process of submitting a complaint to the Central Bureau of Investigation (CBI) regarding this matter. Additionally, personal insolvency proceedings involving Anil Ambani are currently active at the National Company Law Tribunal (NCLT) in Mumbai.
