The government has initiated a fresh inquiry into several firms associated with the Reliance Anil Dhirubhai Ambani Group (ADAG), spearheaded by Anil Ambani. This investigation has been entrusted to the Serious Fraud Investigation Office (SFIO), a specialized investigative unit under the Ministry of Corporate Affairs (MCA).
This move follows previous examinations conducted by the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI), and the Securities and Exchange Board of India (SEBI). The current focus is on potential breaches of corporate governance regulations and potential fund diversions within the group’s entities.
The Ministry of Corporate Affairs (MCA) received alerts from auditors and financial institutions, pointing out possible irregularities in the financial records of certain ADAG companies. Concerns arose during forensic audits conducted by banks following loan defaults by Reliance Capital and Reliance Communications (RCom).
A government official informed The Economic Times that the SFIO investigation will delve into potential corporate governance violations, including any negligence by banks, auditors, or rating agencies. The probe will also scrutinize fund diversions or routing through shell companies. If any fraudulent or shell entity is identified, the MCA or Registrar of Companies (RoC) may take punitive actions, such as deregistering the entity or initiating legal proceedings.
The four entities directly under SFIO’s investigation from the group are Reliance Infrastructure (RInfra), Reliance Communications (RCom), Reliance Commercial Finance Ltd (RCFL), and CLE Pvt Ltd. Further entities within the Reliance Group may come under scrutiny if connections to fund movements are discovered.
The escalation of the probe follows stringent actions by the ED, which recently seized assets worth nearly Rs 7,500 crore linked to alleged fund diversions. These assets include properties in Mumbai and New Delhi. Investigators allege that between 2010 and 2012, certain group companies obtained substantial loans from Indian banks, with a significant portion of these funds allegedly diverted through various transactions.
The Anil Ambani Group has denied any misconduct. Reliance Infrastructure has clarified that recent developments have no impact on its operations or stakeholders, emphasizing that Anil Ambani has not been on its board for over three years.
The SFIO will now analyze the financial transactions among the companies, identify individuals accountable for key decisions, and ascertain if corporate regulations were violated. Depending on the findings, penalties, legal action, or director disqualifications may ensue. This government action underscores a heightened focus on accountability, with multiple agencies investigating different aspects of the group’s financial activities.
The SFIO investigation is crucial in uncovering potential misuse of public funds and identifying those responsible.