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The Enforcement Directorate (ED) has summoned Reliance Group chairman Anil Ambani to appear on August 5 in connection with a loan fraud case. This action stems from an ongoing probe into allegations of bribery and unsecured loans. The ED's investigation centers around the suspected diversion of funds, particularly loans provided by Yes Bank to Ambani's group companies between 2017 and 2019. According to sources, the ED will record Ambani's statement under the Prevention of Money Laundering Act (PMLA) once he complies with the summons. Simultaneously, the agency is conducting searches in Bhubaneshwar and Kolkata related to a fake bank guarantee racket, indicating a potentially broader network of financial irregularities. The ED initiated its investigation based on a case registered by the Economic Offences Wing of Delhi Police on November 11, 2024, highlighting the collaborative efforts of various law enforcement agencies in tackling the alleged financial crimes. The current action by the ED follows closely on the heels of simultaneous raids conducted in connection with financial irregularities and the alleged diversion of over Rs 10,000 crore by multiple group companies associated with Anil Ambani. This substantial amount underscores the magnitude of the alleged financial misconduct and the potential impact on public funds and the financial system.
The investigation primarily focuses on the alleged illegal diversion of approximately Rs 3,000 crore in loans extended by Yes Bank to Ambani's group companies between 2017 and 2019. The ED's searches encompassed over 35 locations in Mumbai, targeting 50 companies and 25 individuals suspected of involvement in the alleged scheme. A Delhi-based ED unit is spearheading the investigation, reflecting the agency's commitment to uncovering the full extent of the alleged financial wrongdoing. In response to the raids, Reliance Power and Reliance Infrastructure issued clarification letters to the stock exchanges, seeking to address investor concerns and maintain transparency amidst the ongoing investigation. However, the ongoing scrutiny is undoubtedly putting pressure on the Reliance Group and its leadership. The case has drawn the attention of multiple regulatory agencies, including the National Housing Bank, SEBI, the National Financial Reporting Authority (NFRA), and Bank of Baroda, all of which have shared relevant information with the ED. This collaborative approach among various regulatory bodies highlights the seriousness of the allegations and the concerted effort to thoroughly investigate the matter.
According to officials, the ED has uncovered significant violations in Yes Bank's loan approval processes for RAAGA companies. These violations include backdated Credit Approval Memorandums, a lack of due diligence, and breaches of the bank's established credit policies. The loans in question were allegedly diverted to multiple group and shell companies, further obscuring the flow of funds and hindering efforts to trace the money. Red flags identified by the ED include loans extended to entities with weak financials, shared addresses and directors, poor documentation, and the practice of evergreening loans. This detailed analysis of Yes Bank's lending practices underscores the potential systemic issues within the bank and the need for enhanced regulatory oversight. Furthermore, SEBI is reported to have shared its findings with the ED regarding the case of RHFL, indicating a potential overlap between securities market irregularities and the alleged loan diversion scheme. The searches conducted at premises linked to Anil Ambani have significant financial implications, potentially involving Rs 20,000 to Rs 30,000 crore of public money, which the ED believes has been siphoned off, including to undisclosed foreign bank accounts and foreign assets created over time.
A substantial portion of the funds allegedly came to Reliance ADAG from SBI and other public sector banks, as well as Yes Bank (then a private entity) and mutual funds. This revelation raises concerns about the role of various financial institutions in the alleged scheme and the potential for systemic vulnerabilities. Preliminary investigations have also uncovered a mysterious entity known as 'C Company,' which is allegedly involved in related party transactions within the overall scam. The existence of this previously unknown entity further complicates the investigation and underscores the complexity of the alleged financial wrongdoing. The ED's investigation into Anil Ambani and the Reliance Group is a complex and multifaceted undertaking, involving allegations of loan fraud, bribery, and the diversion of substantial sums of money. The case has the potential to have significant implications for the financial industry, regulatory oversight, and the accountability of corporate leaders. As the investigation progresses, further details are likely to emerge, shedding light on the full extent of the alleged financial irregularities and the individuals and entities involved. The outcome of this case will undoubtedly be closely watched by the financial community and the public alike.
Source: ED summons Anil Ambani on August 5; loan diversion charge being probed: What's the case about?