The Supreme Court of India has advised the Enforcement Directorate (ED) to constitute a Special Investigation Team (SIT) to probe an alleged large-scale bank fraud involving companies linked to industrialist Anil Ambani. The direction came with the court stressing that the ongoing investigations must be taken to their logical conclusion.
The matter concerns the affairs of Reliance Communications Ltd. (RCOM), Reliance Commercial Finance Ltd. (RCFL), Reliance Home Finance Ltd. (RHFL) and Reliance Power Ltd. (RPOWER). The ED informed the court that investigations under the Prevention of Money Laundering Act (PMLA) are currently underway, along with a broader probe into the financial dealings of the group entities.
Placing details on record, the agency submitted that RHFL had borrowed public funds from 33 banks and financial institutions and allegedly defaulted on Rs 7,523.46 crore. Of this, lenders have recovered Rs 2,116.28 crore, leaving a net default of Rs 5,407.18 crore, which the ED described as constituting “proceeds of crime”.
In respect of RCFL, 21 financial institutions were allegedly defaulted to the tune of Rs 6,280.57 crore. With regard to RCOM, the total outstanding amount stands at Rs 40,185.55 crore, which the agency similarly characterised as proceeds of crime.
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As for RPOWER, the ED submitted that forged bank guarantees were allegedly furnished in connection with a power project agreement, resulting in a loss of Rs 105.98 crore to the public exchequer. The agency further informed the court that it has searched 46 premises, issued 13 Provisional Attachment Orders and attached 204 properties valued at Rs 12,012.45 crore.
Observing the magnitude of the alleged fraud, the Supreme Court remarked that the ED ought to scrutinise every possible financial transaction that might have led to siphoning of funds and must determine the estimated value of the proceeds of crime. The court made it clear that the investigation should be thorough and comprehensive.
Significantly, the bench also directed the Central Bureau of Investigation (CBI) to examine the conduct of bank officials. It observed that it is imperative for the CBI to investigate whether financial assistance was released in collusion or connivance with the management of the defaulting companies. The court directed the agency to look into any possible nexus, conspiracy or collusion between the management and bank authorities.
Noting that both the ED and the CBI had taken time before initiating action, the Supreme Court expressed the expectation that the agencies will now act promptly, independently, fairly and in a dispassionate manner. It directed them to file a status report within four weeks.
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