ED raids 35 premises, searches 50 companies linked to Anil Ambani

Probe relates to alleged illegal diversion of loans worth Rs 3,000 crore from Yes Bank

The Enforcement Directorate (ED) on Thursday raided more than 35 premises and searched more than 50 companies in New Delhi and Mumbai linked to Reliance Anil Ambani Group (RAAGA).  Sources told Business Standard the investigation related to alleged illegal diversion of loans worth Rs 3,000 crore from Yes Bank from 2017 to 2019.

 

As many as 25 people were also searched. The Securities and Exchange Board of India (Sebi), the National Housing Bank, the National Financial Reporting Authority, and Bank of Baroda were among organisations that shared information with the ED about RAAGA.

 

“A preliminary investigation by the ED has revealed a well-planned and tho­ught out scheme to divert/ siphon off public money by cheating banks, shareholders, investors and other public institutions. The offence of bribing bank off­i­cials, including the promoter of Yes Bank, is also under scanner,” said a source.

 

The ED’s investigation allegedly revealed illegal loan diversion of around Rs 3,000 crore from Yes Bank. The ED found that before the loan was granted, Yes Bank promoters received money, said the source.

 

“The ED has found gross violations in Yes Bank loan approvals to RAAGA companies. Credit approval memorandums (CAMs) were back-dated; investments were proposed without any due diligence/ credit analysis in violation of the bank’s credit policy.”

 

Reacting to the raid, Reliance Power clarified that the actions have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders of Reliance Power. 

 

 “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. It is clarified that Reliance Power is a separate and independent listed entity with no business or financial linkage to RCOM or RHFL. RCOM is undergoing Corporate Insolvency Resolution Process according to the Insolvency and Bankruptcy Code, 2016, for over six years,” the company said on exchanges. 

 

Such loans were diverted to RAAGA companies and shell entities. “Some red flags found by ED included loans given to entities with weak financials; no proper documentation of loans and no due diligence — borrowers have common addresses, common directors,” said the source. Reliance Power statement further added that Anil D Ambani is not on the Board of Reliance Power. “Accordingly, any action taken against RCOM or RHFL has no bearing or impact on the governance, management, or operations of Reliance Power.”

 

“Based on information received from Sebi, ED has found that Reliance Infra has diverted a large sum of money disguised as ICDs to Group Companies of RAAGA through C Company – an undisclosed related party company. Reliance Infra did not disclose C Company as its related party to avoid proper approval from shareholders and the audit committee, said the ED source.

 

Other alleged offences include “diversion of loans to promoter group entities; loans onward lent on the same date; loa­ns disbursed on same date as date of appli­cation; loans disbursed prior to san­ction; misrepresentation of financials.”

 

The source added that the Sebi has shared its findings about Reliance Home Finance Ltd (RHFL) with the ED. Dramatic increase in corporate loans by RHFL, from Rs 3,742.60 crore in FY17-18 to Rs 8,670.80 crore in FY18-19 is also under the ED’s lens.

 

Issues of Irregular & Expedited Approvals, Process Deviations and many other illegalities have been found.

 

State Bank of India (SBI) earlier this week classified Reliance Communications and its promoter-director Anil Ambani as “fraud” and will file a complaint with the Central Bureau of Investigation, Parliament was informed on Monday. The entities were classified as fraud in June in accordance with the central bank's Master Directions on Fraud Risk Management and Bank’s Board-approved Policy on Classification, Reporting & Management of Frauds, said Pankaj Chaudhary, Minister of State for Finance, in a written reply in the Lok Sabha.