Dutch prosecutors arrest 3 for allegedly laundering $1.2 bn for Ambani unit

Dutch investigators have arrested three former employees of a local firm suspected of laundering USD 1.2 billion through over-invoicing services and works rendered for a gas pipeline built by a unit controlled by billionaire Mukesh Ambani, a charge vehemently denied by Reliance Industries.

East West Pipeline Ltd (EWPL), which was previously known as Reliance Gas Transportation Infrastructure Ltd (RGTIL), denied that any money was laundered at any stage during implementation of the project and that higher capital cost of a pipeline would result in higher tariff for users for receiving natural gas through the line.

Ambani's listed firm Reliance Industries too denied any link to the pipeline company saying he neither set up any gas pipeline in 2006 nor did it have contracts with any Netherlands company for any gas line.

The Fiscal Intelligence and Investigation Service & Economic Investigation Service (FIOD-ECD) arrested three former employees of Dutch pipeline firm A Hak, NL, alleging that an estimated USD 1.2 billion in profits earned by the company through over-invoicing services and works rendered to RGTIL were "creamed off" to Singapore-based Biometrix Marketing Ltd, a company they claim is allegedly linked to Reliance.

An AFP report quoting a statement issued by public prosecutor's office said that the company acted as "invoice duplicator" to enable the Indian firm to claim costs twice from gas customers.

"It is suspected that the Dutch company used to increase the amounts on the invoices for the materials and services supplied," it said.

"The 'profits' earned in this way were subsequently creamed off via the Dutch company," it said.

The gains were then transferred via a complex web of businesses based among others in Dubai, Switzerland and the Caribbean, before eventually ending up at a business owned by the Indian company in Singapore, AFP said adding the suspects allegedly received payments of up to USD 10 million for their involvement.

"In this case Dutch companies are suspected of assisting an Indian client to launder suspected illegal earnings," AFP quoted the statement as saying.

The real losers "were probably individual citizens in India" as the cost of production of gas is passed onto the consumer, it added.

Reached for comments, EWPL said the pipeline project was built by a privately owned entity, in which promoters' private funds were invested.

"No public funds were invested and all borrowings from banks, financial institutions and others have been fully repaid by the promoters. We strongly deny any suggestion of any money having been laundered at any stage during the implementation of the project. Suggestion of such impropriety lacks logic and economic rationale and is emphatically denied," EWPL said in a statement.

The pipeline project, it said, was implemented by a consortium of independent contractors from India, China, Russia and the Middle East. "A Hak, Middle East was one of the contractors. The Project was completed expeditiously at globally competitive costs which have been benchmarked by reputed independent agencies."
In a statement, RIL said neither it nor any of its subsidiaries set up any gas pipeline in 2006. Also, it never had any contracts with any Netherland company for setting up of any gas pipeline and hence the report cannot relate to RIL. "RIL has always complied with all rules, regulations and applicable laws and any suggestion of impropriety by RIL is emphatically denied."