The Enforcement Directorate (ED) has intensified its investigation into the Reliance Communications (RCom) bank loan fraud case, attaching substantial assets linked to the Anil Ambani group. This development marks a significant escalation in the ongoing probe into alleged financial irregularities.

Latest Asset Seizure

The ED has attached 132 acres of land at Dhirubhai Ambani Knowledge City in Navi Mumbai, valued at Rs 4,462.81 crore. This action is part of the agency's broader investigation into the RCom bank loan fraud case.

Cumulative Asset Attachments

Investigation Background

The probe stems from a CBI FIR that names Anil Ambani, RCom, and others for alleged fraud, conspiracy, and corruption related to loans exceeding Rs 40,000 crore. These loans were reportedly taken from Indian and foreign banks between 2010 and 2012.

Key Findings

The ED's investigation has uncovered several alleged financial irregularities:

Additionally, the investigation revealed:

• Misuse of bill discounting schemes
• Questionable international fund transfers
• Five loan accounts declared fraudulent by lending banks

Implications

This case highlights the ongoing efforts of Indian regulatory bodies to address alleged financial misconduct in the corporate sector. The substantial value of assets attached underscores the scale of the investigation and its potential impact on the involved parties.

As the investigation continues, it may have broader implications for corporate governance practices and lending procedures in India's financial sector.

Reliance Communications (RCOM) has been classified as a fraudulent account by Bank of Maharashtra, citing misappropriation of funds and criminal breach of trust. This decision comes amidst ongoing financial troubles for the telecom company, which has been under corporate insolvency resolution process since June 2019.

Key Findings

The bank's classification is based on a forensic audit that revealed:

• Misuse of Letter of Credit (LC) discounting for round-tripping of loans to related parties
• Utilization of funds for repayment of outstanding LCs, potentially indicating evergreening of loans
• Circular routing of funds between RCOM and its subsidiary Reliance Infratel Limited (RITL) amounting to Rs 2,779.38 crores

Regulatory Actions and Implications

• Bank of Maharashtra has reported the matter to the Reserve Bank of India (RBI)
• The bank plans to file police/CBI complaints as per RBI directions
• RCOM is currently protected under the Insolvency and Bankruptcy Code (IBC) against liabilities for offenses committed prior to the insolvency process

RCOM's Current Status

• A resolution plan for RCOM has been approved by creditors and is awaiting approval from the National Company Law Tribunal (NCLT)
• The company may receive protection under Section 32A of the IBC against prosecution for offenses committed before the insolvency process, once the resolution plan is approved

Company's Response

According to the LODR data, RCOM has acknowledged receipt of the fraud classification letter from Bank of Maharashtra. The company stated:

• The credit facilities in question pertain to the period before the Corporate Insolvency Resolution Process (CIRP)
• These facilities will be resolved as part of the resolution plan or in liquidation, as per the IBC
• RCOM is protected from suits/proceedings during the CIRP under Section 14(1)(a) of the IBC
• The company is seeking legal advice on the way forward regarding this development

This development adds another layer of complexity to RCOM's ongoing financial restructuring and highlights the challenges faced by the Indian telecom sector in recent years.