New Delhi: Enforcement Directorate’s (ED) Headquarters Investigation Unit, New Delhi, has seized assets worth Rs 2,032.81 crore in India belonging to Anil Ambani-led Reliance Power Ltd (RPL) under the Foreign Exchange Management Act (FEMA).
The seized assets include bank balances of RPL and its shareholding in Sasan Power Limited, which are equivalent in value to the foreign exchange held outside India by the company in contravention of Section 4 of FEMA, according to an official statement issued by the investigative agency Wednesday.
The investigation was initiated on the basis of information received from the Securities and Exchange Board of India (SEBI), pertaining to write-offs aggregating Rs 2,101.46 crore made by RPL in its books of account. 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 said.
Search operations were conducted under FEMA, from March 6 to 8 this year, in which incriminating evidence was seized, and statements of several persons were recorded.
Investigation has revealed that Reliance Natural Resources Ltd, which has 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).
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 investigation found that these BVI entities were controlled and managed from India by the Reliance Anil Ambani Group through front persons, who acted in accordance with the Group’s directions.
Further investigation has revealed that the loan proceeds were utilised for varied purposes, including temporary round-tripping of funds to India through foreign entities based in Mauritius. The funds were utilised for the benefit of the Reliance Anil Ambani Group 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. During the investigation, it was found that this documentation was backdated and prepared in order to project these transactions as genuine business transactions.
Further investigation is in progress, the statement added.
