CBI Launches Investigation into Anil Ambani and Reliance Communication for Alleged ₹2,929 Crore Fraud

The Central Bureau of Investigation (CBI) recently searched the Mumbai home of Anil Ambani, Director of Reliance Communication Ltd. (RCom), following allegations of defrauding the State Bank of India (SBI) of Rs 2929.05 crore. The searches were conducted at two locations in Mumbai, including RCom's official premises and Ambani's residence, Sea Wind, at Cuffe Parade.

According to the SBI complaint, which is now part of the FIR, RCom had an outstanding debt exceeding Rs 40,000 crore to various lenders. The public sector bank alone faced a loss of Rs 2929.05 crore as per 2018 figures. The complaint pertains to issues dating back over a decade.

Allegations and Financial Irregularities

The CBI has accused Ambani and RCom of criminal conspiracy, cheating, and breach of trust. Allegedly, they misrepresented facts to secure credit facilities from SBI for RCom. The agency also claims there was misuse and diversion of loan funds through inter-company transactions and other irregularities.

In response to these developments, a spokesperson for Anil Ambani stated that he denies all allegations and intends to defend himself. The spokesperson highlighted that during the relevant period, Ambani was a Non-Executive Director with no involvement in daily management.

Forensic Audit Findings

A forensic audit conducted in 2020 revealed deviations in how funds obtained from banks were utilised by RCom. It alleged that Rs 13,667.73 crore (44%) were used for repaying loans and obligations to banks and financial institutions, while Rs 12,692.31 crore (41%) went to related parties.

The audit further noted that Rs 6,265.85 crore from bank loans were used to repay other loans, Rs 5,501.56 crore went to related parties, and Rs 1,883.08 crore was invested from bank loans. These investments were mostly liquidated quickly for payments to various parties.

Netizen Engineering Transactions

The audit flagged a capital advance of Rs 5,525 crore given to Netizen Engineering Pvt Ltd in 2015-16. In subsequent years, Netizen acquired assets worth over Rs 6,000 crore from Millenium Private Network Ltd., one of which was transferred to RCIL.

The valuation of these assets remains unclear. RCom wrote off the capital advance against a receivable balance from RCIL after transferring the asset. The audit suggested that Netizen's financial background did not match its activities as recorded in RCom's books.

Judicial Proceedings and Challenges

Currently, Reliance Communications is managed under a Committee of Creditors led by SBI and overseen by a Resolution Professional. The matter is pending before the National Company Law Tribunal (NCLT) and other judicial forums for six years.

Anil Ambani has challenged SBI's declaration before a competent judicial forum. Despite SBI withdrawing proceedings against five other Non-Executive Directors, Ambani claims he has been selectively targeted.

SBI's Fraud Classification

SBI classified Anil Ambani's account as fraud on November 10, 2020, filing a complaint with the CBI on January 5, 2021. However, this complaint was returned due to a status quo order by the Delhi High Court on January 6, 2021.

A Supreme Court ruling on March 27, 2023, required lenders to allow borrowers representation before classifying accounts as fraud. Consequently, SBI reversed the fraud classification on September 2, 2023 but reclassified it after following due process per an RBI circular dated July 15, 2024.

With inputs from PTI