What’s Behind the Ongoing ED Raids on Anil Ambani's Companies?
Enforcement Directorate's Investigation into Reliance Group
Mumbai: The Enforcement Directorate (ED) has been conducting searches at various locations linked to Reliance Group chairman Anil Ambani for the third consecutive day. According to official sources, the agency has seized numerous documents and computer equipment during these operations.
The raids, initiated on July 24, are part of an investigation into a suspected money laundering case involving a bank loan fraud estimated at Rs 3,000 crore, alongside other financial misconduct allegations against certain companies.
These searches are being carried out under the Prevention of Money Laundering Act (PMLA) and are ongoing at several sites among the over 35 locations targeted in Mumbai since Thursday, as per the sources.
The premises involved belong to 50 companies and 25 individuals, including several executives from Anil Ambani's firms.
The investigation primarily focuses on claims of illegal loan diversions amounting to approximately Rs 3,000 crore, which were provided by Yes Bank to Ambani's group companies between 2017 and 2019.
On Thursday, Reliance Power and Reliance Infrastructure communicated to the stock exchanges that while they recognize the ongoing actions, the raids have had 'absolutely no impact' on their business operations, financial health, or stakeholders.
The companies clarified that the media reports relate to allegations concerning transactions involving Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL) that date back over a decade.
Sources from the ED indicated that prior to the loan approvals, Yes Bank's promoters allegedly received funds in their businesses.
The agency is delving into the connections between these alleged bribes and the loans.
Additionally, the ED is investigating claims of significant breaches in the loan approval process at Yes Bank, including issues like backdated credit approval documents and investments made without proper due diligence, violating the bank's credit policies.
It is alleged that the loans were 'diverted' to various group companies and 'shell' entities by the involved parties.
The agency is also examining cases where loans were granted to financially unstable entities, with inadequate documentation and due diligence, as well as borrowers sharing common addresses and directors.
The money laundering case is rooted in at least two FIRs filed by the CBI and reports from the National Housing Bank, SEBI, National Financial Reporting Authority (NFRA), and Bank of Baroda shared with the ED.
These reports suggest a 'well-planned scheme' to misappropriate public funds by deceiving banks, shareholders, investors, and other public institutions.
Recently, the Union government informed Parliament that the State Bank of India has classified RCOM and Ambani as 'fraud' and is in the process of filing a complaint with the CBI.
The ED is also scrutinizing a bank loan 'fraud' exceeding Rs 1,050 crore involving RCOM and Canara Bank, along with some 'undisclosed' foreign bank accounts and assets.
Reliance Mutual Fund is reported to have invested Rs 2,850 crore in AT-1 bonds, raising suspicions of 'quid pro quo' by the agency.
Additional Tier 1 (AT-1) bonds are perpetual instruments issued by banks to bolster their capital base, characterized by higher risks and interest rates compared to traditional bonds. The agency is also investigating an alleged loan diversion of around Rs 10,000 crore linked to Reliance Infrastructure.
A SEBI report concerning RHFL is also part of the ED's investigation.
The companies have stated in their filings that Anil Ambani does not serve on the boards of either Reliance Power or Reliance Infrastructure and that there is no 'business or financial linkage' to RCOM or RHFL.
They emphasized that any actions taken against RCOM or RHFL do not affect the governance, management, or operations of Reliance Power or Reliance Infrastructure.