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ET BureauMumbai: The Enforcement Directorate (ED) on Wednesday arrested Amitabh Jhunjhunwala and Amit Bapna, former senior executives of Anil Dhirubhai Ambani Group (ADAG), in a money laundering case linked to alleged diversion of funds from group companies, people aware of the development said.
The two, arrested under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002, were produced before a special court in New Delhi.
Seeking their custody, the ED told the court its probe has revealed a “pre-conceived and well-planned scheme” to allegedly siphon off public money from Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL) through a network of shell or paper companies, purportedly opened and controlled by ADAG under the guise of corporate loans.
The agency alleged that the scheme defrauded banks, shareholders, investors and public institutions.
According to the ED, both Jhunjhunwala and Bapna were aware of the shell entities to which corporate loans were sanctioned. Bapna played a key role in the sanction and disbursal of these loans, it alleged. After approvals from senior management, including Jhunjhunwala, Bapna allegedly instructed officials at RHFL and RCFL to extend loans to such entities.
The agency further claimed that Bapna was involved in raising funds, monitoring cash flows and overseeing financial operations through a common treasury mechanism that mobilised resources via term loans, non-convertible debentures and commercial papers.
Investigators also alleged that the transaction structure was designed to circumvent regulatory norms and disclosure requirements, enabling layering and concealment of the origin of funds.
The ED said the arrests and custodial interrogation were necessary to confront the accused with documentary and digital evidence gathered during the investigation, trace further proceeds of crime, identify other individuals and entities involved, and prevent tampering with evidence or influencing witnesses.
It also flagged concerns of possible flight risk, noting that Bapna is currently employed with an Indonesia-based firm and holds a residence permit there.
Multiple agencies, including the Central Bureau of Investigation (CBI) and the Mumbai Police, are probing companies linked to ADAG.
A forensic audit conducted by Grant Thornton India LLP has flagged several irregularities in transactions at RCFL. According to the audit, the company had availed credit facilities from 24 lenders under a multiple banking arrangement, with Bank of Baroda acting as the lead bank under an intercreditor agreement signed on July 6, 2019.
It highlighted adverse findings regarding the utilisation of loan funds, including servicing of potentially related entities and group companies, as well as circular transactions.
It found that of the ₹4,766.62 crore traced in end utilisation, around 39% (₹1,867.89 crore) was used for debt servicing of related entities and group companies. About 25% (₹1,199.29 crore) of transactions were flagged as potentially circular, including ₹557.37 crore categorised as pass-through transactions where the end use could not be established. Additionally, ₹344.89 crore was invested in mutual funds and ₹200.38 crore was used for loan disbursements, the audit noted.
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The two, arrested under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002, were produced before a special court in New Delhi.
Seeking their custody, the ED told the court its probe has revealed a “pre-conceived and well-planned scheme” to allegedly siphon off public money from Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL) through a network of shell or paper companies, purportedly opened and controlled by ADAG under the guise of corporate loans.
The agency alleged that the scheme defrauded banks, shareholders, investors and public institutions.
According to the ED, both Jhunjhunwala and Bapna were aware of the shell entities to which corporate loans were sanctioned. Bapna played a key role in the sanction and disbursal of these loans, it alleged. After approvals from senior management, including Jhunjhunwala, Bapna allegedly instructed officials at RHFL and RCFL to extend loans to such entities.
The agency further claimed that Bapna was involved in raising funds, monitoring cash flows and overseeing financial operations through a common treasury mechanism that mobilised resources via term loans, non-convertible debentures and commercial papers.
Investigators also alleged that the transaction structure was designed to circumvent regulatory norms and disclosure requirements, enabling layering and concealment of the origin of funds.
The ED said the arrests and custodial interrogation were necessary to confront the accused with documentary and digital evidence gathered during the investigation, trace further proceeds of crime, identify other individuals and entities involved, and prevent tampering with evidence or influencing witnesses.
It also flagged concerns of possible flight risk, noting that Bapna is currently employed with an Indonesia-based firm and holds a residence permit there.
Multiple agencies, including the Central Bureau of Investigation (CBI) and the Mumbai Police, are probing companies linked to ADAG.
A forensic audit conducted by Grant Thornton India LLP has flagged several irregularities in transactions at RCFL. According to the audit, the company had availed credit facilities from 24 lenders under a multiple banking arrangement, with Bank of Baroda acting as the lead bank under an intercreditor agreement signed on July 6, 2019.
It highlighted adverse findings regarding the utilisation of loan funds, including servicing of potentially related entities and group companies, as well as circular transactions.
It found that of the ₹4,766.62 crore traced in end utilisation, around 39% (₹1,867.89 crore) was used for debt servicing of related entities and group companies. About 25% (₹1,199.29 crore) of transactions were flagged as potentially circular, including ₹557.37 crore categorised as pass-through transactions where the end use could not be established. Additionally, ₹344.89 crore was invested in mutual funds and ₹200.38 crore was used for loan disbursements, the audit noted.
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