Whalesbook
A Public Interest Litigation (PIL) has been filed in the Supreme Court against Reliance Communications (RCOM) and its former promoter Anil Ambani, alleging a massive banking fraud involving the diversion of approximately ₹31,580 crore. The petition claims current investigations by CBI and ED are insufficient and seek a court-monitored probe into fund siphoning, fabrication of accounts, and potential complicity of bank officials and regulators.
A Public Interest Litigation (PIL) has been filed before the Supreme Court of India by EAS Sarma, a former Secretary to the Government of India, seeking a court-monitored investigation into alleged massive banking fraud involving Reliance Communications (RCOM), its group entities, and former promoter Anil Ambani. The petition claims that the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) have only investigated a fraction of the alleged wrongdoing.
According to the PIL, RCOM and its subsidiaries, Reliance Infratel and Reliance Telecom, received loans totaling ₹31,580 crore between 2013 and 2017 from a consortium of banks led by State Bank of India (SBI). A forensic audit commissioned by SBI allegedly revealed substantial fund diversion, including thousands of crores used for repaying unrelated loans, transfers to related parties, and investments in mutual funds that were quickly liquidated. The audit also pointed to fabricated financial statements and the use of shell entities like Netizen Engineering and Kunj Bihari Developers to siphon and launder funds.
The petitioner highlights a nearly five-year delay by SBI in acting upon a forensic audit report received in October 2020, suggesting "institutional complicity." The plea argues that the conduct of nationalised bank officials, who are public servants, must be examined. It also refers to findings concerning Reliance Capital and its subsidiaries, which allegedly involved diversion of thousands of crores to promoter-linked companies and offshore fund siphoning through shell entities in foreign jurisdictions.
The PIL contends that the current investigations fail to address core issues like account fabrication, forgery, use of non-existent bank accounts, and the role of various facilitators. It seeks a comprehensive probe under Supreme Court oversight to ensure accountability for individuals involved in the alleged misuse of public funds.
Impact
This news could significantly impact investor confidence in companies associated with Anil Ambani and raise concerns about corporate governance and regulatory oversight in India's financial sector. If the allegations are proven, it could lead to further investigations and stricter regulatory actions. Rating: 8/10
Terms
Public Interest Litigation (PIL): A legal action filed in a court of law to protect public interest, often brought by individuals or organizations on behalf of the public.
Forensic Audit: An examination of financial records and transactions to uncover fraud, irregularities, or other financial crimes.
Central Bureau of Investigation (CBI): India's premier investigative agency, responsible for investigating criminal cases, particularly those involving corruption and economic offenses.
Enforcement Directorate (ED): A law enforcement agency responsible for enforcing economic laws and fighting economic crime in India.
Shell Entities: Companies that exist only on paper and are often used for illegal purposes like money laundering, tax evasion, or hiding ownership.
Prima Facie: Latin for 'at first glance'; refers to evidence that is sufficient to prove a case unless contradicted.
Institutional Complicity: The involvement or cooperation of an institution or its members in an illegal or wrongdoing.
Inter-corporate Deposits: Loans or deposits made between two corporate entities.
Promoter: An individual or entity that initiates and finances a new company or business venture.
