Anil Ambani Under Investigation for Alleged Loan Fraud

Reliance Group Chairman Anil Ambani is currently under investigation by the Enforcement Directorate (ED) for alleged money laundering linked to bank loan frauds amounting to Rs 17,000 crore. The probe has intensified following the examination of records from 50 companies across 35 locations and interviews with 25 individuals. According to sources, a significant amount of incriminating documents and digital evidence was uncovered, leading to Mr. Ambani’s summons.

Banks Under Scrutiny for Loan Sanctions

The ED has reached out to a dozen banks, including State Bank of India, Axis Bank, ICICI Bank, and HDFC Bank, seeking details on the due diligence processes followed for loans sanctioned to Mr. Ambani’s companies, such as Reliance Housing Finance and Reliance Communications. The agency is particularly interested in understanding the loan clearance processes, timelines of defaults, and subsequent recovery actions.

Allegations of a Calculated Scheme

Sources indicate that the ED suspects a “calculated scheme” designed to defraud banks, investors, shareholders, and public institutions by misusing loan funds. This suspicion is further supported by the recent arrest of Partha Sarathi Biswal, Managing Director of Biswal Tradelink Pvt Ltd, for allegedly filing Rs 68 crore in fake guarantees.

Details of Alleged Loan Diversions

Preliminary investigations have revealed that Rs 3,000 crore in loans from Yes Bank were wrongfully diverted between 2017 and 2019. Additionally, a larger fraud involving over Rs 14,000 crore is alleged against Reliance Communications. The ED claims an illegal quid pro quo arrangement existed where Yes Bank promoters received payments in privately-held concerns before loan sanctions.

Concerns Over Loan Issuance Practices

The investigation has highlighted instances where loans were issued to companies with poor or unverified financial sources. Common directors and addresses were used without essential documentation, and funds were allegedly routed to shell entities. There are also allegations of ‘loan evergreening,’ where new loans were used to repay older ones.

Implications for Anil Ambani’s Business Empire

Once among the world’s richest individuals, Anil Ambani’s business empire has faced significant challenges due to these allegations. The State Bank of India has declared Reliance Communications’ loan account as ‘fraud,’ citing fund diversion and irregular accounting practices. Mr. Ambani’s legal team has expressed shock at these developments.

Ongoing Legal Challenges

In addition to the current investigation, Mr. Ambani faces allegations from markets regulator SEBI for siphoning off over Rs 5,000 crore with senior executives’ help at Reliance Home Finance. He was fined Rs 25 crore for these actions.