Mumbai: The Ministry of Corporate Affairs (MCA) has directed its investigation wing, the Serious Fraud Investigation Office (SFIO), to probe multiple entities linked to the Reliance Anil Dhirubhai Ambani Group (ADAG) over alleged corporate governance issues and suspected fund diversion, people in the know told ET.
The order issued earlier this week directed the SFIO to investigate at least four entities: Reliance Infrastructure (RInfra), Reliance Communications (RCom), Reliance Commercial Finance Ltd (RCFL), and CLE Pvt Ltd.
The ministry took the step after getting multiple references from financial institutions and auditors highlighting alleged inconsistencies in ADAG's financial disclosures. Some of these concerns had earlier surfaced during forensic audits conducted by banks following the debt default of Reliance Capital and RCom.
"... since these entities have already been probed by the CBI and the ED, the SFIO probe will focus on corporate governance issues, if there was any deliberate omission by the banks, auditors, rating agencies," said a government official privy to the matter. "If there are any instances of siphoning, and if they have been routed through shell companies."
Once the SFIO identifies any shell/ fraudulent entity during its probe, the MCA or the Registrar of Companies (RoC) can strike off, prosecute, or disqualify the concerned entity.
ADAG wasn't immediately available for comment. The group had previously denied any wrongdoing.
Following the ED action, RInfra in a regulatory statement said there is no impact on its operations, shareholders, employees, or any other stakeholders of the company from the development. Anil Ambani has not been on the board of RInfra for more than three and a half years, it said.
Last week, the ED attached more than ₹7,500 crore worth of properties linked to ADAG as part of its ongoing probe into alleged diversion of public funds by group entities. These include a residential property at Pali Hill in Mumbai's Bandra, the Reliance Centre in New Delhi, and more than 132 acres in Dhirubhai Ambani Knowledge City at Navi Mumbai valued at ₹4,462.81 crore.
The attachment orders were issued on October 31 under the Prevention of Money Laundering Act, the agency said in a statement on Monday.
According to the ED, its investigation has revealed diversion of public money by multiple ADAG companies, including RInfra, RCom, Reliance Home Finance Ltd (RHFL), RCFL, and Reliance Power Ltd.
Between 2010 and 2012, RCom and its affiliates reportedly raised thousands of crores from Indian banks, of which ₹19,694 crore remains outstanding, the ED said. Five banks have already classified RCom's loan accounts as fraudulent, citing circular fund movements, evergreening of debt, and misuse of bill discounting, it said.
The probe found that loans raised by one group entity were routinely used to repay borrowings of another, routed to related parties, or invested in mutual funds in violation of the loan terms. Funds totalling more than ₹13,600 crore were allegedly used for evergreening loans, while ₹12,600 crore were transferred to connected parties and ₹1,800 crore were diverted into fixed deposits or mutual funds that were later liquidated and rerouted, it alleged.
ED's case is based on CBI FIRs that pegged Yes Bank's unpaid investments in RHFL and RCFL at ₹3,337.5 crore. Yes Bank had invested ₹2,965 crore in RHFL and ₹2,045 crore in RCFL instruments between 2017 and 2019, which later turned non-performing.
Earlier in September, the CBI filed its chargesheet in the case, alleging that Anil Ambani and Yes Bank cofounder Rana Kapoor colluded to engineer a system of reciprocal financial support.
The order issued earlier this week directed the SFIO to investigate at least four entities: Reliance Infrastructure (RInfra), Reliance Communications (RCom), Reliance Commercial Finance Ltd (RCFL), and CLE Pvt Ltd.
The ministry took the step after getting multiple references from financial institutions and auditors highlighting alleged inconsistencies in ADAG's financial disclosures. Some of these concerns had earlier surfaced during forensic audits conducted by banks following the debt default of Reliance Capital and RCom.
"... since these entities have already been probed by the CBI and the ED, the SFIO probe will focus on corporate governance issues, if there was any deliberate omission by the banks, auditors, rating agencies," said a government official privy to the matter. "If there are any instances of siphoning, and if they have been routed through shell companies."
Once the SFIO identifies any shell/ fraudulent entity during its probe, the MCA or the Registrar of Companies (RoC) can strike off, prosecute, or disqualify the concerned entity.
ADAG wasn't immediately available for comment. The group had previously denied any wrongdoing.
Following the ED action, RInfra in a regulatory statement said there is no impact on its operations, shareholders, employees, or any other stakeholders of the company from the development. Anil Ambani has not been on the board of RInfra for more than three and a half years, it said.
Last week, the ED attached more than ₹7,500 crore worth of properties linked to ADAG as part of its ongoing probe into alleged diversion of public funds by group entities. These include a residential property at Pali Hill in Mumbai's Bandra, the Reliance Centre in New Delhi, and more than 132 acres in Dhirubhai Ambani Knowledge City at Navi Mumbai valued at ₹4,462.81 crore.
The attachment orders were issued on October 31 under the Prevention of Money Laundering Act, the agency said in a statement on Monday.
According to the ED, its investigation has revealed diversion of public money by multiple ADAG companies, including RInfra, RCom, Reliance Home Finance Ltd (RHFL), RCFL, and Reliance Power Ltd.
Between 2010 and 2012, RCom and its affiliates reportedly raised thousands of crores from Indian banks, of which ₹19,694 crore remains outstanding, the ED said. Five banks have already classified RCom's loan accounts as fraudulent, citing circular fund movements, evergreening of debt, and misuse of bill discounting, it said.
The probe found that loans raised by one group entity were routinely used to repay borrowings of another, routed to related parties, or invested in mutual funds in violation of the loan terms. Funds totalling more than ₹13,600 crore were allegedly used for evergreening loans, while ₹12,600 crore were transferred to connected parties and ₹1,800 crore were diverted into fixed deposits or mutual funds that were later liquidated and rerouted, it alleged.
ED's case is based on CBI FIRs that pegged Yes Bank's unpaid investments in RHFL and RCFL at ₹3,337.5 crore. Yes Bank had invested ₹2,965 crore in RHFL and ₹2,045 crore in RCFL instruments between 2017 and 2019, which later turned non-performing.
Earlier in September, the CBI filed its chargesheet in the case, alleging that Anil Ambani and Yes Bank cofounder Rana Kapoor colluded to engineer a system of reciprocal financial support.
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