Reliance Power Limited (RPower) finds itself embroiled in a significant legal controversy as the Enforcement Directorate (ED) takes action in a money laundering case involving an alleged fake bank guarantee.

Key Developments

• The ED has arrested Ashok Pal, Chief Financial Officer (CFO) of Reliance Power, in connection with a money laundering case.
• The case revolves around an alleged fake bank guarantee worth ₹68.20 crore submitted to Solar Energy Corporation of India Limited (SECI).
• The guarantee was provided on behalf of Reliance NU BESS Limited, a subsidiary of Reliance Power.

Case Background

The investigation stems from a Delhi Police FIR involving Odisha-based Biswal Tradelink. The company allegedly operated a racket providing fake bank guarantees for an 8% commission. The modus operandi involved using a fake email domain similar to that of State Bank of India to create fraudulent communications.

ED's Previous Actions

• The ED had previously arrested Partha Sarathi Biswal, the Managing Director of Biswal Tradelink.
• Investigations revealed that Biswal Tradelink was a paper entity with no actual operations.

Reliance Group's Stance

Reliance Group has stated that they are victims of fraud and had filed a criminal complaint against the third party with Delhi Police.

Implications for Reliance Power

This development comes at a crucial time for Reliance Power. According to the company's recent LODR (Listing Obligations and Disclosure Requirements) filing:

The company has also recently filed applications with the BSE and NSE seeking their no objection for the reclassification of Reliance Capital Limited to the public category. This follows the implementation of a resolution plan by InduslInd International Holdings Limited under the Insolvency and Bankruptcy Code, 2016.

As the investigation unfolds, stakeholders will be closely watching the potential impact on Reliance Power's operations and financial standing. The case underscores the importance of robust internal controls and due diligence in corporate financial transactions.

Reliance Power Limited has announced key leadership changes amidst an ongoing Enforcement Directorate (ED) investigation into suspected loan frauds involving associated companies.

New Appointments

In a board meeting held on October 11, Reliance Power made the following appointments:

• Shri Arup Ashok Gupta has been appointed as a Non-Executive and Non-Independent Director. Gupta brings over 40 years of HR experience and has been with the Reliance Group for 16 years.

• Shri Neeraj Parakh, currently serving as Executive Director and CEO, has been given additional charge as interim Chief Financial Officer. Parakh has 29 years of professional experience, including more than 20 years with Reliance, and has been instrumental in delivering power generation projects totaling over 10 GW with capital expenditure of ₹50,000.00 crore.

Ongoing ED Investigation

These appointments come in the wake of the ED's investigation into suspected loan frauds involving Reliance Home Finance Ltd. (RHFL) and Reliance Commercial Finance Ltd. (RCFL). The probe centers on loans totaling ₹12,524.00 crore, of which ₹6,931.00 crore have been classified as non-performing assets (NPAs).

Key Findings of the Investigation:

• Preliminary findings suggest potential circular lending practices, with funds being routed back to other Reliance group companies.
• Rana Kapoor, associated with Yes Bank, allegedly played a significant role in sanctioning these loans.
• Companies linked to Kapoor's family also received credit facilities.
• A Grant Thornton audit identified significant fund diversion and violations of lending policies.

The ED has conducted extensive searches across 60 companies and 22 individuals as part of this wide-ranging investigation.

Corporate Developments

Reliance Power has also reported recent corporate activities:

1. Outstanding debt securities worth ₹250.00 crore, issued on July 10, 2017, with a maturity date of June 30, 2035, and an 8.00% coupon rate.

2. An application for reclassification of Reliance Capital Limited to the public category, following IndusInd International Holdings Limited's implementation of a resolution plan under the Insolvency and Bankruptcy Code, 2016.

As the investigation continues and the company undergoes leadership changes, stakeholders will be closely monitoring further developments in this case.