Anil Ambani’s Reliance Power and Reliance Infra Stocks Tank After ED Attaches ₹1,120 Crore Assets in Loan Fraud Probe

Shares of Anil Ambani’s Reliance Power and Reliance Infra fell sharply after Enforcement Directorate (ED) provisionally attached over 18 properties, fixed deposits, bank balance and shareholding in unqouted investments of Reliance Anil Ambani Group worth Rs 1,120 crore in Reliance Home Finance Limited/Reliance Commercial Finance Limited/Yes Bank fraud case. Reliance Power shares fell by 1% and is currently trading at Rs. 37.59 against the previous close of 3818. Meanwhile, Reliance Infra shares fell by 2% and is currently trading at Rs.155.50 against the previous close of 158.88. The ADAG group earlier, had issued a statement on behalf of  Reliance Power and Reliance Infrastructure on ED action. Both companies stated that they do not have any business or financial linkage to Reliance Communications (RCOM) and Reliance Home Finance Limited (RHFL). They also said that Reliance Power and Infra are both separate and independent listed entities. The companies also disclosed that  Anil Dhirubhai Ambani is not on the board of directors panel for both the listed companies, hence he does not have any governance, management or operational power.

The ED has reportedly attached seven properties of Reliance Infrastructure Limited, two properties of Reliance Power Limited and nine properties of Reliance Value Service Private Limited. It has also attached fixed Deposits in the name of Reliance Value Service Private Limited, Reliance Venture Asset Management Private Limited, M/s Phi Management Solutions Private Limited , M/s Adhar Property Consultancy Pvt Ltd and M/s Gamesa Investment Management Private Limited. The anti-money laundering agency has also attached some unquoted investments by Reliance Venture Asset Management Private Limited and M/s Phi Management Solutions Private Limited.

Earlier, the ED had attached properties worth over Rs. 8,997 crore in bank fraud cases of Reliance Communications Ltd. (RCOM), Reliance Commercial Finance Ltd., and Reliance Home Finance Ltd. With the latest attachments, the cumulative group attachment has now reached Rs 10,117 crore.The ED has detected fraudulent diversion of public money by various Reliance Anil Ambani group companies, including Reliance Communications Ltd, Reliance Home Finance Ltd (RHFL), Reliance Commercial Finance Ltd (RCFL), Reliance Infrastructure Ltd (RIL) and Reliance Power Ltd (RHFL).

During 2017-19, Yes Bank invested Rs 2,965 crore in RHFL instruments and Rs 2,045 crore in RCFL instruments. By December 2019, these became non-performing investments. The outstanding was Rs 1,353.50 crore for RHFL and Rs 1,984 crore for RCFL. The investigation by ED in the RHFL and RCFL case has revealed that both these companies received public funds of more than Rs 11,000 crore. The investigation has also brought to light that before Yes Bank invested in Reliance Anil Ambani group companies, it had received huge funds from erstwhile Reliance Nippon Mutual Fund. As per SEBI regulations, Reliance Nippon Mutual Fund could not invest or divert funds directly in Anil Ambani group finance companies due to conflict-of-interest rules. Therefore, public money in mutual fund schemes was routed indirectly by them. The path ran through Yes Bank’s exposures. According to reports, the public funds reached Anil Ambani group companies through circuitous route.ED has also initiated an investigation on the basis of FIR registered by the Central Bureau of Investigation (CBI) under various sections of Indian Penal Code, 1860 and Prevention of Corruption Act, 1989 against RCOM, Anil Ambani and others.

The ED has also initiated an investigation on the basis of a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI) against Reliance Communications, Anil Ambani and others. RCOM and its group companies availed loans from domestic and foreign lenders from 2010-12 onwards, of which a total amount of Rs 40,185 crore is outstanding. “Nine banks have declared the loan accounts of the group as fraud. Investigation has revealed that loans taken by one entity from one bank were utilised for repayment of loans taken by other entities from other banks, transfer to related parties, and investments in mutual funds, which was in contravention to the terms and conditions of the sanction letter of the loans,” the spokesperson added.“In particular, RCOM and its group companies diverted over Rs 13,600 crore for evergreening of loans; over Rs 12,600 crore was diverted to connected parties; and over Rs 1,800 crore was invested in FDs/MFs (fixed deposits, mutual funds), etc, which was substantially liquidated for rerouting to group entities. Huge misuse of bill discounting for the purpose of funnelling funds to connected parties has also been detected by ED. Certain loans were siphoned off outside India through foreign outward remittances,” the spokesperson said.