The Directorate of Enforcement (ED) has provisionally attached INR30.8 billion (USD347.7 million) worth of properties connected to the Reliance Anil Ambani Group as part of a fraud investigation under the Prevention of Money Laundering Act, 2002 (PMLA). The group and its companies are accused of fraudulently diverting public money, misuse of bill discounting and siphoning off loan funds outside India.
More than 42 properties were attached including 30 owned by Reliance Infrastructure, five by Adhar Property Consultancy and four by Mohanbir Hi-tech Build. The properties are located in Delhi, Noida, Ghaziabad, Mumbai, Pune, Thane, Hyderabad, Chennai, Kancheepuram and East Godavari.
Group companies – including Reliance Communications, Reliance Home Finance, Reliance Commercial Finance, Reliance Infrastructure and Reliance Power – are accused of diverting public money.
Between 2010 and 2012, Reliance Communications had raised billions from Indian banks, of which INR196.94 billion remains outstanding, and were now classed as non-performing assets, while five banks declared the company’s loan accounts as fraudulent.
The ED investigation revealed that INR136 billion was used in evergreen loans (using loan amounts to pay loans at other banks), INR126 billion was diverted to connected parties, and more than INR18 billion was invested in mutual funds and fixed deposits. These actions violated the terms in the loan approval letters. Bill discounting was used to funnel funds to connected parties and loans siphoned off outside India, were completed through foreign outward remittances.
Multiple irregularities in loan processes were uncovered during the investigation. These include disbursal of the loan amount before formal approval, same day application, loan approvals, agreement and disbursal of the loan amount, loan approvals before applications were submitted, undated approvals, loan amounts not being used for intended purposes, security misrepresentation and unsecured lending, blanket waivers, weak or non-operational or shell borrowers.
The investigation revealed that the complex shareholdings between the borrowing entities was designed to hide the ultimate beneficiaries.
It was also shown that Reliance Home Finance and Reliance Commercial Finance received INR100 billion in public funds, with a sizeable portion sourced from Yes Bank. Prior to this, Yes Bank had received substantial funds from Reliance Nippon Mutual Funds, an entity not allowed to invest or divert funds directly to the Anil Ambani group of companies as per the Securities and Exchange Board of India rules due to conflicts of interest. This was another irregularity where public funds reached the company through a circuitous route.
Investigations are ongoing.
