Reliance Power, R Infra issue clarification: ED raids against Anil Ambani group companies; here’s what the companies said
The Enforcement Directorate on Thursday conducted simultaneous raids in connection with an alleged money laundering case involving bank loan fraud worth Rs 3,000 crore against Reliance Group chairman Anil Ambani‘s companies, according to a PTI report.Officials stated that searches are being executed at over 35 locations in Mumbai, covering 50 companies and 25 individuals under the Prevention of Money Laundering Act (PMLA).A Delhi-based ED unit is spearheading the investigation. According to ED sources quoted in the report, they are investigating alleged improper diversion of approximately Rs 3,000 crore in loans, granted by Yes Bank to Ambani’s group companies between 2017 and 2019.In reaction to the raids, Reliance Power and Reliance Infrastructure issued clarification letters to the exchanges. Here is what the Reliance Power letter said:Reliance Power Limited (Reliance Power) wishes to clarify regarding the media reports regarding the recent action by the enforcement agency. The said actions have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders of Reliance Power. The media reports appear to pertain to allegations concerning transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL) which are over 10 years old. It is clarified that Reliance Power is a separate and independent listed entity with no business or financial linkage to RCOM or RHFL. RCOM is undergoing Corporate Insolvency Resolution Process as per the Insolvency and Bankruptcy Code, 2016 since over 6 years. RHFL has been fully resolved pursuant to the judgment of the Hon’ble Supreme Court of India. Similar allegations as those set out in the media reports are sub-judice and pending before the Hon’ble Securities Appellate Tribunal, as per publicly available information. Further, Mr. Anil D. Ambani is not on the Board of Reliance Power. Accordingly, any action taken against RCOM or RHFL has no bearing or impact on the governance, management, or operations of Reliance Power. Reliance Power continues to focus on its business plans and remains committed to creating value for all stakeholders.A similar letter was issued by Reliance Infrastructure.What’s the case about?Meanwhile sources told PTI that ED has discovered Yes Bank promoters received funds in their ventures just prior to the loan disbursement.The federal agency is examining the connection between these alleged payments and the loan approval.Sources indicated that the agency is also investigating alleged serious breaches in Yes Bank’s loan approvals to Anil Ambani Group companies, including accusations of backdated credit approval memorandums (CAMs) and investments proposed without proper credit analysis, violating the bank’s credit policies.The entities involved are suspected of redirecting loans to various group companies and shell organisations.The investigation focuses on several irregularities, including loans granted to financially weak entities, insufficient loan documentation and due diligence, and companies sharing identical addresses and directors, according to sources.The investigation into money laundering is based on multiple CBI FIRs and findings from the National Housing Bank, SEBI, National Financial Reporting Authority (NFRA) and Bank of Baroda.Sources indicate these reports suggest a systematic approach to misappropriate public funds through defrauding banks, shareholders, investors and other public institutions.The ED investigation is also understood to incorporate a SEBI report concerning Reliance Home Finance Limited (RHFL).The market regulator’s findings show RHFL’s corporate loans increased from Rs 3,742.60 crore in FY 2017-18 to Rs 8,670.80 crore in FY 2018-19.
