Investigation Launched into Anil Ambani Group Firms by MCA

Mumbai: The Ministry of Corporate Affairs (MCA) has initiated an investigation into several companies associated with the Reliance Anil Dhirubhai Ambani Group (ADAG) due to alleged issues related to corporate governance and potential fund misappropriation. This directive was issued to the Serious Fraud Investigation Office (SFIO) earlier this week, targeting at least four entities: Reliance Infrastructure, Reliance Communications, Reliance Commercial Finance Ltd, and CLE Pvt Ltd.

The MCA's decision follows numerous reports from financial institutions and auditors that highlighted inconsistencies in ADAG's financial statements. Some of these issues had previously emerged during forensic audits conducted by banks after Reliance Capital and Reliance Communications defaulted on their debts. According to a government official familiar with the situation, the SFIO's focus will be on corporate governance matters, examining whether banks, auditors, and rating agencies omitted critical information.

The investigation aims to uncover any instances of fund siphoning, particularly through the use of shell companies. Should the SFIO identify fraudulent entities during its investigation, the MCA or the Registrar of Companies may take action, including the potential disqualification or prosecution of these entities.

ADAG did not respond immediately to requests for comment, and the group has previously denied any allegations of wrongdoing. In a regulatory statement, Reliance Infrastructure asserted that the ongoing investigations do not affect its operations or stakeholders. The company noted that Anil Ambani has not served on its board for over three years.

In a related development, the Enforcement Directorate (ED) has recently attached properties valued at more than ₹7,500 crore linked to ADAG as part of its inquiry into alleged public fund diversion involving group firms. This includes a residential property in Pali Hill, Mumbai, the Reliance Centre in New Delhi, and over 132 acres in Dhirubhai Ambani Knowledge City in Navi Mumbai, valued at ₹4,462.81 crore. The attachment orders were issued on 31 October under the Prevention of Money Laundering Act, as stated by the ED.

The ED indicated that its investigations uncovered the diversion of public funds by various ADAG entities, including Reliance Infrastructure, Reliance Communications, Reliance Home Finance Ltd, Reliance Commercial Finance Ltd, and Reliance Power Ltd. Between 2010 and 2012, Reliance Communications and its affiliates reportedly raised substantial funds from Indian banks, of which ₹19,694 crore remains unpaid. Five banks have classified Reliance Communications' loan accounts as fraudulent, citing issues such as circular fund movements and the misuse of bill discounting.

The investigation revealed that loans acquired by one group company were frequently used to settle debts of another, or were transferred to related parties, in violation of loan agreements. Allegedly, over ₹13,600 crore was used to maintain loan payments, while ₹12,600 crore was redirected to associated parties, and ₹1,800 crore was diverted into fixed deposits or mutual funds that were subsequently liquidated and rerouted.

The ED's case is based on FIRs filed by the Central Bureau of Investigation (CBI), which estimated Yes Bank's unpaid investments in Reliance Home Finance Ltd and Reliance Commercial Finance Ltd at ₹3,337.5 crore. Yes Bank had invested ₹2,965 crore in Reliance Home Finance Ltd and ₹2,045 crore in Reliance Commercial Finance Ltd between 2017 and 2019, investments that ultimately became non-performing.

In September, the CBI submitted its chargesheet in this case, alleging a conspiracy between Anil Ambani and Yes Bank co-founder Rana Kapoor to create a system of mutual financial support, raising further questions about the financial practices within the Anil Ambani Group.