Daijiworld Media Network - New Delhi
New Delhi, Oct 14: The Enforcement Directorate (ED) 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 investigative agency said on Wednesday.
The seized assets include bank balances of RPL and its shareholding in Sasan Power Limited, equivalent in value to the foreign exchange allegedly held outside India by the company in violation of Section 4 of FEMA, according to an official statement.
The investigation was initiated based on information received from the Securities and Exchange Board of India (SEBI) regarding write-offs totalling Rs 2,101.46 crore recorded by RPL in its books of account. The write-offs related to overseas investments and advances made to companies in the British Virgin Islands (BVI) and the Cayman Islands, the statement said.
Search operations under FEMA were conducted from March 6 to 8 this year, during which the ED seized incriminating evidence and recorded statements of several persons.
The investigation revealed that Reliance Natural Resources Ltd, which has since merged with RPL, raised $300 million through Foreign Currency Convertible Bonds in 2006. Of this amount, $275 million was invested in its wholly owned Singapore subsidiary, Reliance Natural Resources (Singapore) Pte Ltd (RNRL-S).
RNRL-S subsequently placed the funds on deposit with Deutsche Bank (Suisse) SA in Geneva. These deposits were used as collateral for loans extended to entities incorporated in the British Virgin Islands.
According to the ED, the BVI entities were controlled and managed from India by the Reliance Anil Ambani Group through front persons who acted on the group's directions.
Further investigation revealed that the loan proceeds were used for various purposes, including the temporary round-tripping of funds into India through foreign entities based in Mauritius. The funds were allegedly utilised for the benefit of the Reliance Anil Ambani Group and parked outside India.
The ED found that the BVI entities failed to repay the loans extended by Deutsche Bank. As part of an alleged cover-up, documents were fabricated to show that RNRL-S and Indonesian subsidiaries of RPL had advanced funds to the BVI entities for apparently genuine business purposes.
The investigation found that the documents had been backdated and prepared to portray the transactions as legitimate business dealings, the statement said.
Further investigation into the matter is in progress, the agency added.