Anil Ambani Offers Full Cooperation to ED in 15-Year-Old FEMA Probe

Anil Ambani has offered to make himself available to the Enforcement Directorate (ED) for a probe related to a 2010 Foreign Exchange Management Act (FEMA) case. He stated through a media release that he is ready to record his statement at any date and time suitable to the ED, either virtually or via recorded video. This comes after he previously skipped an ED summon. The investigation pertains to the Jaipur–Reengus Highway Project, where the ED suspects approximately Rs 100 crore was transferred abroad through the hawala route.

Ambani's spokesperson clarified that the FEMA case is 15 years old and concerns issues associated with a road contractor. Reliance Infrastructure was awarded an EPC contract for the Jaipur-Ringus Highway in 2010, described as a purely domestic contract with no foreign exchange component. The project has since been completed and is under the National Highways Authority of India (NHAI).

This investigation is separate from a previous money laundering case where Ambani was questioned by the ED regarding an alleged Rs 17,000 crore bank fraud against his group companies. His spokesperson also noted that Ambani served as a non-executive director at Reliance Infrastructure for about 15 years (April 2007 to March 2022) and was not responsible for daily operations.

The share prices of some Anil Dhirubhai Ambani Group companies have seen declines in the past six months, with Reliance Infrastructure down 29.51%, Reliance Power down 6.86%, and Reliance Communication down 2.26%.

Impact

This news may lead to increased scrutiny of companies associated with Anil Ambani and the broader ADAG Group. While the case is old and Ambani is cooperating, any further developments could impact investor sentiment and the stock performance of related entities. The offer to cooperate might be viewed positively as a step towards resolving the matter.

Rating: 7/10

Difficult Terms

• Enforcement Directorate (ED): A government agency in India tasked with enforcing economic laws and combating economic crimes.
• Foreign Exchange Management Act (FEMA): Indian legislation regulating foreign exchange transactions, aiming to facilitate international trade and payments.
• Hawala: An informal system of transferring money, often in cash, bypassing formal banking channels, sometimes used for illegal financial activities.
• EPC Contract: Engineering, Procurement, and Construction contract, a comprehensive agreement for project execution, commonly used in infrastructure development.
• Non-executive Director: A board member who is not involved in the day-to-day management of a company, providing independent oversight.
• ADAG Group: Anil Dhirubhai Ambani Group, a conglomerate of businesses led by Anil Ambani.