Why has ED summoned Anil Ambani on August 5

India Today

6 days ago

The Enforcement Directorate (ED) has called Anil Ambani, chairman and managing director of Reliance Group, to appear for questioning on August 5. This is part of an investigation into an alleged Rs 17,000 crore loan fraud, according to a report by The Economic Times.The case relates to money laundering under the Prevention of Money Laundering Act (PMLA). Last week, ED officials searched 35 locations in Mumbai. These searches covered 50 companies and 25 individuals connected to Reliance Group.Alongside the ED's probe, the Securities and Exchange Board of India (Sebi) has submitted findings of a separate investigation.Sebi's report, as accessed by The Economic Times, alleged that Reliance Infrastructure (R Infra) diverted around Rs 10,000 crore. This money was moved through inter-corporate deposits (ICDs) to other Reliance Group companies. The route taken was via a private company called CLE Pvt Ltd, which was not earlier disclosed as a related party.CLE, an engineering and construction firm based in Santacruz East, Mumbai, came under the scanner during the investigation. Sebi found that R Infra transferred funds to CLE over many years. According to its report, this was done without informing shareholders or audit committees, which is required under current laws.A person familiar with the group told ET that the figures shared in the Sebi report are incorrect. According to this person, Reliance Infra had already disclosed this matter on February 9. 'Sebi has not made any independent discovery,' the person said. 'Reliance Infra's total exposure was Rs 6,500 crore, so how could the diversion be Rs 10,000 crore?'The same person added that the company had followed legal processes to recover the amount. Reliance Infra reportedly reached a settlement to recover the full Rs 6,500 crore through mediation led by a retired Supreme Court judge. The case was filed with the Bombay High Court.He also said that the recovery from Odisha's distribution companies, part of the settlement deal, is still pending in court. 'This amount is fully recoverable,' he said, and denied receiving any notice from Sebi on the issue.In May, Sebi wrote to three agencies: ED, the National Financial Reporting Authority (NFRA) and the Insolvency and Bankruptcy Board of India (IBBI), asking them to investigate the matter on their own.According to Sebi, the transactions between R Infra and CLE were not just business dealings. The market regulator said the company showed these as normal business activities, which helped hide the fact that funds were being moved to another group company.The report added that R Infra did not disclose these connections in its financial reports. Sebi claimed this misled investors and regulators. 'By considering CLE as a third-party company, R Infra avoided accurate and meaningful disclosures,' said the report. It added that these misstatements 'continue till date.'Sebi found that R Infra had moved funds to CLE in different forms. These included loans, investments in shares and giving corporate guarantees. As of March 31, 2022, the total exposure was Rs 8,302 crore. The regulator's probe covers financial years from 2016 to 2023.Between 2017 and 2021, R Infra wrote off Rs 10,110 crore because of provisions, fair value adjustments and impairments. Sebi said that even after CLE showed signs of not being able to repay loans, R Infra kept sending more funds.It also found that CLE's annual transactions made up a significant portion of R Infra's total assets. From 2013 to 2023, this ranged from 25% to 90% each year.Sebi further claimed that R Infra did not name CLE as a related party to avoid mandatory clearances and checks. This included approvals from shareholders and audit committees.The report pointed to documents that showed the link between CLE and Reliance Group. These included submissions by CLE to Yes Bank, where CLE named R Infra as its promoter. Audit committee meeting notes also mentioned CLE as a group company. In addition, all email addresses linked to CLE's bank accounts ended with @relianceada.com.Statements by key people during the Sebi probe and internal company records supported these findings. Several directors and top managers of CLE were also part of Reliance Group's leadership, further suggesting a close connection.Sebi's report said Anil Ambani held over 40% stake in Reliance Infrastructure until March 2019. He was also non-executive chairman and a director of the company till March 25, 2022. Based on this role, Sebi has claimed that he had strong control and influence over the financial decisions of R Infra during the time when the money was moved.- EndsTune InTrending Reel
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