Reliance Communications Faces Legal Action: ED Files Supplementary Complaint

ED Takes Action Against Reliance Communications

New Delhi: The Enforcement Directorate (ED) has submitted an additional prosecution complaint against Reliance Communications Limited under the Prevention of Money Laundering Act (PMLA) to a special court, as stated in an official announcement made on Sunday.

This supplementary complaint was lodged on Saturday, following the initial prosecution complaint filed on March 27.

The complaint names Reliance Communications Limited (RCOM), Reliance Telecom Limited (RTL), Gautam Bhailal Doshi, Sateesh Seth, Amitabh Jhunjhunwala, and others as defendants for violations under Section 3 and Section 3 in conjunction with Section 70, which are punishable under Section 4 of the PMLA, 2002.

The total amount involved in the alleged crime is estimated at Rs 40,185.55 crore, representing the outstanding debts owed by the borrowing entities to a consortium of banks, financial institutions, and bondholders. The complaint outlines the specific roles of the accused in the management, concealment, and misrepresentation of funds, including the fraudulent certification of the intended use of $1 billion from Foreign Currency Convertible Bonds (FCCB).

The ED has requested the confiscation of assets valued at Rs 8,078.06 crore, which have been attached and confirmed by the Adjudicating Authority. These assets include leasehold and immovable properties located in New Delhi, Navi Mumbai, Bhubaneswar, Chennai, and Pune.

In this case, Doshi was arrested on June 12, and Seth was taken into custody on July 9. Both individuals are currently held in judicial custody.

The special court acknowledged the primary prosecution complaint on June 15.

The ED's investigation was initiated based on several FIRs filed by the CBI's Banking Securities and Fraud Branch in New Delhi, following complaints from banks and financial institutions. The offenses involve the fraudulent acquisition and diversion of both fund-based and non-fund-based credit facilities by RCOM, RTL, and Reliance Infratel Limited, encompassing numerous interconnected transactions.

The investigation uncovered that new credit facilities were misused to repay, rotate, and extend previous domestic and foreign liabilities, rather than for their intended purposes.

Funds were funneled through affiliated companies, specially created conduit entities, multiple bank accounts, and liquid mutual funds, and were used to service earlier External Commercial Borrowings and FCCB, while being falsely represented as legitimate business expenses or income.

Further findings indicated that this fraudulent operation began as early as 2007 and persisted as a continuous criminal endeavor. Loan proceeds were redirected to group companies like Reliance Infrastructure Ltd. and Reliance Capital Ltd., and were also misappropriated for the personal assets of the promoters abroad, artificially inflating RCOM's profits.

The investigation is ongoing, as noted in the statement.