ED Begins PMLA Investigation Against Anil Ambani's Reliance Group Companies
Arvind Gunasekar
Real journalism holds power accountable
Since 2015, The Wire has done just that.
But we can continue only with your support.
New Delhi: The Enforcement Directorate has begun investigating the Anil Ambani's Reliance Group companies after the Central Bureau of Investigation registered two first information reports against them.
Over 35 premises, 50 companies and over 25 individuals are covered in search operations undertaken by the ED under section 17 of the Prevention of Money Laundering Act.
The case has to do with Yes Bank, which in 2017, when it was headed by Rana Kapoor, invested in Reliance Commercial Finance Limited, Reliance Capital Ltd and Reliance Home Finance Ltd to the tune of Rs 900 crore, Rs 1,000 crore and Rs 1,000 crore respectively.
In turn, Anil Ambani Group entities advanced loans to family entities of Rana Kapoor to the tune of Rs 285 crore, allegedly as bribe.
Yes Bank’s investments in the Anil Ambani Group companies turned ‘non performing’ in 2019, after which it filed a complaint with the CBI in 2020. The probe agency registered FIRs RC2242022A0002 and RC2242022A0003 in 2022. The ED conducted searches after a three-year gap.
Other agencies and institutions like the National Housing Bank, SEBI, National Financial Reporting Authority (NFRA), and Bank of Baroda are also learnt to have shared information with the ED.
Preliminary investigation by ED has revealed a well-planned and thought out scheme to divert or siphon off public money by cheating banks, shareholders, investors and other public institutions. The offence of bribing bank officials including the promoters of Yes Banks Limited is also under the ED's scanner.
The ED has said that its preliminary investigation reveals illegal loan diversion of around Rs 3,000 crores from Yes Bank between 2017 and 2019. ED has found that just before the loan was granted, Yes Bank promoters received money in their concerns.
Among violations that the ED found in Yes Bank loan approvals to Reliance Anil Ambani Group of companies are backdated credit approval memorandums, investments proposed without any due diligence or credit analysis in violation of banks credit policy and so on.
In violation of loan terms, these loans were further diverted to many group companies and shell companies. Some red flags found by ED include the fact that loans given to entities with weak financials, no proper documentation of loans, no due diligence, borrowers have common addresses or common directors and so on. The ED also found diversion of loans to promoter group entities, ever-greening of GPC loans, loans onward lent on same date, loans disbursed on same date as date of application, loans disbursed prior to sanction, and misrepresentation of financials.
SEBI is also learnt to have shared its findings with ED in the case of Reliance Home Finance Ltd. The ED is looking at a dramatic increase in corporate loans by RHFL, from Rs 3,742.60 crore in FY 2017-18 to Rs 8,670.80 crore in FY 2018-19. It is also investigating issues of irregular and expedited approvals, process deviations and other illegalities.
Reliance Power's and Infrastructure's statements
Reliance Power and Reliance Infrastructure have released identical notes saying that the ED's actions "have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders of" Reliance Power or Reliance Infrastructure.
"The media reports appear to pertain to allegations concerning transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL) which are over 10 years old. It is clarified that [Reliance Power/Reliance Infrastructure] is a separate and independent listed entity with no business or financial linkage to RCOM or RHFL," it said.
They also added that while RCOM is undergoing the corporate insolvency resolution process as per the Insolvency and Bankruptcy
Code, for the last six years, RHFL has been fully resolved following a Supreme Court judgement.
"Further, Mr. Anil D. Ambani is not on the Board of [Reliance Power/Reliance Infrastructure] . Accordingly, any action taken against RCOM or RHFL has no bearing or impact on the governance, management, or operations of [Reliance Power/Reliance Infrastructure]," the statements said.
This article went live on July twenty-fourth, two thousand twenty five, at fifteen minutes past two in the afternoon.The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.