Loan 'fraud': ED summons Anil Ambani for questioning on Aug 5

New Delhi: The Enforcement Directorate has summoned Reliance Group Chairman Anil Ambani for questioning on August 5 in an alleged loan fraud-linked money laundering case against his group companies, official sources said on Friday.

Ambani, 66, has been asked to depose at the ED headquarters in Delhi as the case has been registered here, the sources said.

The agency will record his statement under the Prevention of Money Laundering Act (PMLA) once he deposes, they said.

The summons come after the federal agency conducted searches against multiple companies and executives of his business group last week. The searches, launched on July 24, went on for three days.

The action pertains to alleged financial irregularities and collective loan "diversion" of more than Rs 10,000 crore by multiple group companies of Ambani.

The searches had covered more than 35 premises in Mumbai, and they belonged to 50 companies and 25 people, including a number of executives of the Anil Ambani Group companies.

ED sources had said the investigation primarily pertains to allegations of illegal loan diversion of around Rs 3,000 crore, given by the Yes Bank to the group companies of Ambani between 2017-2019.

Reliance Power and Reliance Infrastructure, two companies of the group, had informed the stock exchanges saying while they acknowledge the action, the raids 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 had said.

The ED, the sources said, has found that just before the loan was granted, Yes Bank promoters "received" money in their concerns.

The agency is investigating this nexus of "bribe" and the loan.

The sources said the ED is also probing allegations of "gross violations" in Yes Bank loan approvals to these companies, including charges such as back-dated credit approval memorandums and investments proposed without any due diligence/credit analysis in violation of the bank's credit policy.

The loans are alleged to have been "diverted" to many group companies and "shell" (bogus) companies by the entities involved.

The agency is also looking at some instances of loans given to entities with weak financials, a lack of proper documentation of loans and due diligence, borrowers having common addresses and common directors in their companies, etc., the sources said.

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

These reports indicate, the sources said, that there was a "well-planned and thought after scheme" to divert or siphon off public money by cheating banks, shareholders, investors and other public institutions.

The Union government had informed the Parliament recently that the State Bank of India has classified RCOM along with Ambani as 'fraud' and was also in the process of lodging a complaint with the CBI.

A bank loan "fraud" of more than Rs 1,050 crore between RCOM and Canara Bank is also under the scanner of the ED apart from some "undisclosed" foreign bank accounts and assets, the sources said.

Reliance Mutual Fund is also stated to have invested Rs 2,850 crore in AT-1 bonds, and a "quid pro quo" is suspected here by the agency.

Additional Tier 1 (AT-1) are perpetual bonds issued by banks to increase their capital base, and they are riskier than traditional bonds, having higher interest rates. An alleged loan fund diversion of about Rs 10,000 crore involving Reliance Infrastructure, too, is under the scanner of the agency.

A Sebi report on RHFL is also part of the ED probe.

The two companies had said in their filings before the stock exchanges that Anil Ambani was not on the Board of either Reliance Power or Reliance Infrastructure and that they had no "business or financial linkage" to RCOM or RHFL.

Any action taken against RCOM or RHFL, the companies said, has no bearing or impact on the governance, management, or operations of either Reliance Power or Reliance Infrastructure.