What’s Behind the Ongoing ED Raids on Anil Ambani's Companies?
Enforcement Directorate's Ongoing Investigations
Mumbai: The Enforcement Directorate (ED) has extended its search operations against the Reliance Group, led by Anil Ambani, for a third consecutive day in Mumbai. Officials have reported the recovery of various documents and computer equipment from several sites.
These raids commenced on July 24 as part of an investigation into a suspected money laundering case linked to a bank loan fraud amounting to approximately Rs 3,000 crore, alongside other financial misconduct allegations involving substantial sums.
The ongoing searches, conducted under the Prevention of Money Laundering Act (PMLA), are taking place at over 35 locations across Mumbai, involving 50 companies and 25 individuals, including several executives from Ambani's firms.
According to ED sources, the inquiry primarily focuses on claims of illegal loan diversions totaling around 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 issued statements to stock exchanges, asserting that while they recognize the ongoing actions, these raids have had 'no impact' on their business operations, financial health, or stakeholders.
The companies clarified that the media reports relate to transactions involving Reliance Communications Limited (RCOM) and Reliance Home Finance Limited (RHFL), which date back over a decade.
Sources from the ED indicated that prior to the loan approvals, Yes Bank's promoters allegedly received funds linked to these transactions.
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 processes at Yes Bank, including issues like backdated credit approvals 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.
The investigation also examines instances where loans were granted to financially unstable entities, lacking adequate documentation and due diligence, with borrowers sharing common addresses and directors.
This money laundering case is rooted in at least two FIRs filed by the CBI, along with reports from the National Housing Bank, SEBI, National Financial Reporting Authority (NFRA), and Bank of Baroda, which were forwarded to the ED.
These documents suggest a 'well-planned scheme' aimed at misappropriating public funds by deceiving banks, shareholders, and other institutions.
Recently, the Union government informed Parliament that the State Bank of India has classified RCOM and Ambani as 'fraud' and is preparing to file a complaint with the CBI.
The ED is also scrutinizing a bank loan 'fraud' exceeding Rs 1,050 crore involving RCOM and Canara Bank, in addition to undisclosed foreign bank accounts and assets.
Furthermore, Reliance Mutual Fund is reported to have invested Rs 2,850 crore in AT-1 bonds, raising suspicions of 'quid pro quo' arrangements.
Additional Tier 1 (AT-1) bonds are perpetual instruments issued by banks to bolster their capital, 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 hold a position on the boards of Reliance Power or Reliance Infrastructure, and there is no 'business or financial linkage' to RCOM or RHFL.
They emphasized that any actions against RCOM or RHFL do not affect the governance, management, or operations of Reliance Power or Reliance Infrastructure.