ED conducts searches at more than 35 premises linked to Anil Ambani: ‘Well-planned scheme to siphon off public money’

A source said ED started its investigation on the basis of two FIRs registered by the Central Bureau of Investigation (CBI) and other agencies and institutions. “Preliminary investigation conducted by the ED has revealed that there was a well-planned and thought out scheme to divert/ siphon off public money by cheating banks, shareholders, investors and other public institutions,” the source said.

The central agency’s probe has found alleged violations in Yes Bank’s loan approvals to the group’s companies, including backdated credit approval memorandums and proposals for investments made without any due diligence or credit analysis — violations of the bank’s credit policy, among other issues.

Two group companies, Reliance Power and Reliance Infrastructure, said in separate but identical regulatory filings that the ED action has had “absolutely no impact” on their business operations, financial performance, shareholders, employees, or any other stakeholders. “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,” the companies said.

When contacted, a Yes Bank official declined to comment.

Loans to “entities with weak financials; without proper documentation or due diligence; borrowers with common addresses, common directors; diversion of loans to promoter group entities; evergreening of GPC loans; onward lending on same date; loans disbursed on the date of application; loans disbursed prior to sanction; misrepresentation of financials” were among the alleged violations, said a source. “In violation of the loan terms, these loans were further diverted to many group companies and shell companies,” the source said.

The central agency has also alleged that Reliance Mutual Fund invested around Rs 2,850 crore in AT1 bonds of Yes Bank in a suspected quid pro quo arrangement. “These bonds were eventually written down, and money was siphoned off. This was the money of the public — the mutual fund investors,” the source said, adding that the CBI is also investigating this issue.

Another source said that based on information from SEBI, the ED has found that Reliance Infrastructure diverted large sums of money to the group’s companies by disguising them as inter-corporate deposits (ICDs), using a related party called ‘C Company’ that was not previously disclosed. ICDs are short-term loans that companies within the same group often give each other. While legal, they can be used to route funds in ways that escape scrutiny — especially if the transactions aren’t properly documented or disclosed.

“Reliance Infra did not disclose C Company as its related party in order to avoid approval from shareholders and the audit committee. It was also hidden, presumably to circumvent checks and balances imposed on related party transactions as per laws. It has been found that R Infra has taken a haircut of Rs 5,480 crore and only Rs 4 crore has been received in cash. The remaining Rs 6,499 crore has been settled in the form of assignment/ transfer of assets/ economic rights, mainly in certain discoms. These discoms did not have any business for many years and are not operational. Therefore, there are zero chances of recovery of this amount. The loan diversion in this case is over Rs 10,000 crore,” the source said.

The money laundering case stems from at least two CBI FIRs and reports shared by the National Housing Bank, SEBI, the National Financial Reporting Authority (NFRA), and Bank of Baroda with the ED, sources said.

Last year, SEBI banned Anil Ambani and 24 other entities — including former key managerial personnel of RHFL — from the securities market for five years for diversion of funds from the company. SEBI also slapped a Rs 25 crore fine on Anil Ambani for allegedly orchestrating a fraudulent scheme that adversely affected RHFL’s stakeholders, as well as confidence in the integrity of governance structures in regulated financial sector entities. The total penalty imposed on Anil Ambani and the other 24 entities works out to over Rs 625 crore.

SEBI is also learnt to have shared its findings with the ED in the case of RHFL. “A dramatic increase in corporate loans by RHFL — from Rs 3,742.60 crore in FY 2017-18 to Rs 8,670.80 crore in FY 2018-19 — is also under the ED lens. Issues of irregular and expedited approvals, process deviations and many other illegalities have been found,” the source said.

In 2023, Anil Ambani was questioned by the ED in connection with alleged FEMA violations that surfaced during the Income Tax Department’s investigation into his alleged undeclared offshore assets amounting to Rs 800 crore. –(With PTI inputs)