The investigation unit of the Enforcement Directorate (ED) has seized assets worth Rs 2,032.81 crore of Anil Ambani-led Reliance Power Limited (RPL) in India under the Foreign Exchange Management Act (FEMA).
According to an official statement issued by the investigating agency on Wednesday, the seized assets include money deposited in RPL's bank accounts and its stake in Sasan Power Limited. The value of these assets is equivalent to the foreign currency held by the company outside India in violation of Section 4 of FEMA.
The statement said the investigation was initiated based on information received from the Securities and Exchange Board of India (SEBI). This information pertained to write-off of an amount of Rs 2,101.46 crore in the account books of RPL. The amount related to foreign investments made in, and advance payments made to, companies in the British Virgin Islands (BVI) and the Cayman Islands.
The search operation was conducted under FEMA between March 6 and 8 this year. During this, incriminating evidence was seized and statements of many people were recorded.
The investigation revealed that Reliance Natural Resources Limited, which later merged with RPL, had raised $300 million through Foreign Currency Convertible Bonds (FCCB) in 2006. Of this, $275 million was invested in its wholly owned Singapore subsidiary Reliance Natural Resources (Singapore) Pte Ltd (RNRL-S).
RNRL-S had deposited this amount in Geneva-based Deutsche Bank (Suisse) SA. These deposits were used as guarantees for loans given to companies registered in the British Virgin Islands (BVI).
The investigation found that these BVI companies were controlled and managed by the Reliance Anil Ambani Group from India through people who acted as per the instructions of the group.
Further investigation revealed that the loan proceeds were used for various purposes, including temporarily repatriating the funds to India through Mauritius-based foreign companies. This amount was used for the benefit of Reliance Anil Ambani Group and a part of the money was kept outside India.
BVI companies failed to repay loans given by Deutsche Bank. To cover up the matter, documents were prepared to show that the Indonesia based subsidiaries of RNRL-S and RPL had advanced money to these BVI companies for genuine business purposes.
During investigation, it was found that these documents were prepared at a retrospective date, so that these transactions could be presented as genuine business transactions. The statement said that further investigation in the matter is ongoing.