ED Summons Anil Ambani In Rs 17,000 Crore Loan Fraud Probe; Reliance Group Chairman To Show On August 5

The Enforcement Directorate (ED) has summoned Anil Ambani, the chairman and managing director of Reliance Group, for questioning. This is part of an investigation into an alleged ₹17,000-crore loan fraud. Ambani is expected to appear at the ED headquarters in the Capital on August 5. Last week, the ED conducted searches at multiple locations linked to Reliance Group in Mumbai.

In a related matter, the Securities and Exchange Board of India (Sebi) shared findings from its probe with ED and two other agencies. Sebi's investigation focused on a suspected diversion of ₹10,000 crore by Reliance Infrastructure (R Infra). The report claimed that R Infra diverted funds through CLE Pvt Ltd, a company not previously disclosed as related.

Allegations and Responses

A person close to Reliance Group questioned these findings. "Reliance Infrastructure publicly disclosed this matter on February 9, and Sebi did not make any independent discovery," they stated. They argued that the alleged diversion amount is exaggerated and not factual. "When the exposure was Rs 6,500 crore, how can the diversion be Rs 10,000 crore?" they asked.

The individual further explained that Reliance Infra had pursued recovery of its dues diligently. A settlement was reached to recover Rs 6,500 crore through mediation proceedings led by a retired Supreme Court Judge. This settlement was filed before the Bombay High Court. The person also mentioned that Odisha distribution companies involved in this settlement are operational.

Sebi's Investigation Details

Sebi's investigation revealed non-compliance with approval and disclosure norms regarding related party transactions. The report stated that R Infra camouflaged fund diversions as legitimate business deals. It accused R Infra of withholding crucial information in financial statements for the benefit of its promoter and related entities.

According to Sebi's report, R Infra had various financial dealings with CLE through intercorporate deposits (ICDs), equity investments, and corporate guarantees. As of March 31, 2022, these dealings amounted to Rs 8,302 crore. The investigation covered activities from FY16 to FY23.

Financial Dealings with CLE

The report highlighted that from FY17 to FY21, R Infra wrote off Rs 10,110 crore due to fair value adjustments and provisions. Despite recognising CLE's inability to repay loans, R Infra continued providing advances even after creating provisions for doubtful debts.

Sebi found that from FY13 to FY23, annual expenditure on CLE by R Infra ranged between 25-90% of its total assets. The regulator alleged that R Infra did not disclose CLE as a related party to avoid obtaining necessary approvals from shareholders and audit committees.

Documentation and Evidence

Sebi identified CLE as a related party based on documentation such as submissions made by CLE to Yes Bank acknowledging Reliance Infra as one of its promoters. Meeting minutes from Reliance Infra's audit committee also mentioned CLE as a group company.

Further evidence included statements from key management personnel recorded during Sebi's investigation. Directors and executives appointed in CLE were also part of Reliance Group entities. Additionally, signatories of CLE's bank accounts used email IDs from the @relianceada.com domain.

Anil Ambani held over 40% shareholding in Reliance Infrastructure entities until March 2019 due to his position as chairman of Reliance Group (formerly Reliance ADAG). He served as non-executive chairman and director in R Infra until March 25, 2022.