Anil Ambani's Reliance Group Firms Under Govt Scanner over Alleged Fund Diversion; MCA Directs SFIO Probe

The Serious Fraud Investigation (SFIO) under the Ministry of Corporate Affairs (MCA) has been directed to probe multiple entities associated to the Reliance Anil Dhirubhai Ambani Group (ADAG) on grounds of alleged corporate governance issues and suspected fund diversion.

Earlier this week, the order was issued directing the SFIO to investigate at least four entities: Reliance Infrastructure (RInfra), Reliance Communications (RCom), Reliance Commercial Finance Ltd (RCFL) and CLE Pvt Ltd.

After getting multiple references from financial institutions and auditors, who have highlighted alleged inconsistencies in ADAG’s financial disclosures, the ministry took the steps. Earlier, during forensic audits conducted by banks after the debt default of Reliance Capital and RCom, some of these concerns had surfaced.

A government official aware of the matter told Economic Times, "... since these entities have already been probed by the CBI and the ED, the SFIO probe will focus on corporate governance issues, if there was any deliberate omission by the banks, auditors, rating agencies." The official further noted, "If there are any instances of siphoning, and if they have been routed through shell companies."

Once the SFIO identifies any shell/ fraudulent entity during its probe, the MCA or the Registrar of Companies (RoC) can strike off, prosecute, or disqualify the concerned entity.

In connection to the matter, ADAG wasn't available for a comment immediately. However, the group had previously denied any wrongdoing.

Following the ED action, RInfra in a regulatory statement noted that there is no impact on its operations, shareholders, employees, or any other stakeholders of the company from the development. It also stated that Anil Ambani has not been on the board of RInfra for more than three and a half years.

The ED attached more than ₹7,500 crore worth of properties linked to ADAG last week, as part of its ongoing investigation into alleged diversion of public funds by group entities. Among these properties was a residential property at Pali Hill in Mumbai's Bandra, the Reliance Centre in New Delhi and more than 132 acres in Dhirubhai Ambani Knowledge City at Navi Mumbai valued at ₹4,462.81 crore.

Further releasing a statement on Monday, the agency said that the attachment orders were issued on October 31 under the Prevention of Money Laundering Act.

According to the ED, its investigation has revealed diversion of public money by multiple ADAG companies, including RInfra, RCom, Reliance Home Finance Ltd (RHFL), RCFL, and Reliance Power Ltd.

RCom and its affiliates reportedly raised thousands of crores from Indian banks between 2010 and 2012, of which ₹19,694 crore remains outstanding, the ED stated. Five banks have already classified RCom's loan accounts as fraudulent, citing circular fund movements, evergreening of debt, and misuse of bill discounting, it said.

Additionally, the probe found that loans raised by one group entity were routinely used to repay borrowings of another, routed to related parties, or invested in mutual funds in violation of the loan terms. Funds amounting more than ₹13,600 crore were allegedly used for evergreening loans, while ₹12,600 crore were transferred to connected parties and ₹1,800 crore were diverted into fixed deposits or mutual funds that were later liquidated and rerouted, the investigation alleged.

ED's case is on the basis of CBI FIRs that pegged Yes Bank's unpaid investments in RHFL and RCFL at ₹3,337.5 crore. Between 2017 and 2019, Yes Bank had invested ₹2,965 crore in RHFL and ₹2,045 crore in RCFL instruments but it later turned non-performing.

The CBI filed its chargesheet in the case earlier in September, alleging that Anil Ambani and Yes Bank cofounder Rana Kapoor colluded to engineer a system of reciprocal financial support.