The Enforcement Directorate (ED) has seized assets worth ₹2,032.81 crores of Anil Ambani Group’s (RAAG’s) Reliance Power Ltd (RPL), including its bank balances and shareholding of Sasan Power Ltd, which is equivalent in value to the foreign exchange held outside India in contravention of Section 4 of the Foreign Exchange Management Act (FEMA), 1999.
The ED’s Headquarter Investigation Unit carried out seizure under Section 37A of the FEMA.
Investigation was initiated on the basis of information received from the Securities and Exchange Board of India (SEBI), pertaining to write-offs/provisions aggregating ₹2,101.46 crore made by RPL in its books of account, ED said in a statement on Wednesday. These write-offs were related to overseas investments and advances made to companies in the British Virgin Islands (BVI) and the Cayman Islands, the statement read.
Searches were conducted at the premises of the company under FEMA from March 6, to March 8, this year. The agency claims that incriminating evidence were seized and statements of several persons were recorded during the searches.
Investigation has revealed that Reliance Natural Resources Ltd (since merged with RPL) raised $300 million through Foreign Currency Convertible Bonds in 2006. Of this, $275 million was invested in its wholly owned Singapore subsidiary, Reliance Natural Resources (Singapore) Pte Ltd (RNRL-S), said the ED.
RNRL-S placed these funds on deposit with Deutsche Bank (Suisse) SA, Geneva. The deposits were used as collateral for loans extended to entities incorporated in the British Virgin Islands. The agency stated that its probe found that these BVI entities were controlled and managed from India by the RAAG through front persons, who acted as per the Group’s directions.
Further investigation has revealed that the loan proceeds were utilised for varied purposes, including temporary roundtripping of funds to India through foreign entities based in Mauritius. The funds were utilised for the benefit of the RAAG and parked outside India.
The BVI entities failed to repay the loans extended by Deutsche Bank.
As part of the cover up, documents were fabricated to show that RNRL-S and Indonesian subsidiaries of RPL had made advances to these BVI entities for apparent genuine business purposes, the agency alleged. The investigators allegedly found out that this documentation was backdated and prepared in order to project these transactions as genuine business transactions.