New Delhi, Oct 14: The Enforcement Directorate (ED) on Wednesday said it has seized India-based assets worth more than Rs 2,000 crore of Reliance Power Limited (RPL), an Anil Ambani Group company, as part of a FEMA investigation against the firm.
The central agency said in a statement that the seized assets include RPL’s bank balances and its shareholding in Sasan Power Limited.
The seizure order worth Rs 2,032.81 crore was issued on October 12 under section 37A of the Foreign Exchange Management Act (FEMA).
The company responded to the ED action in a regulatory filing on Tuesday, stating that it “disputes” the agency’s allegations and will take all appropriate steps, as legally advised, to safeguard its interests and the interests of all its shareholders and other stakeholders.
The ED investigation stems from a Securities and Exchange Board of India (SEBI) action concerning write-offs or provisions of Rs 2,101.46 crore made by RPL in its books of account. These write-offs were related to overseas investments and advances made to companies in the British Virgin Islands (BVI) and the Cayman Islands, according to the agency.
The ED said Reliance Natural Resources Limited (since merged with RPL) raised USD 300 million through foreign currency convertible bonds in 2006.
Of this, an amount of USD 275 million was invested in its wholly-owned Singapore subsidiary, Reliance Natural Resources (Singapore) Pte Ltd (RNRL-S).
“RNRL-S placed these funds on deposit with Deutsche Bank (Suisse) SA, Geneva, and the deposits were used as collateral for loans extended to entities incorporated in the British Virgin Islands.
“The investigation found that these BVI entities were controlled and managed from India by the Reliance Anil Ambani Group (RAAG) through front persons, who acted as per the group’s directions,” the ED claimed.
The agency’s probe found that the loan proceeds were utilised for varied purposes, including “temporary roundtripping of funds” to India through foreign entities based in Mauritius.
The funds benefited the RAAG and were parked outside India, the ED claimed.
The BVI entities “failed” to repay the loans extended by the Deutsche Bank. As part of the “cover up”, documents were “fabricated” to show that RNRL-S and Indonesian subsidiaries of RPL had made advances to these BVI entities for apparently genuine business purposes.
The ED alleged that this documentation was “backdated” and prepared to project these transactions as genuine business transactions.
