Shares of Reliance Power , led by Anil Ambani, experienced a significant drop of over 10% following reports of an executive's arrest by the Enforcement Directorate (ED). The arrest is linked to alleged financial irregularities, including fake bank guarantees and invoicing cases.

Market Impact

The news had a ripple effect on other Anil Ambani-led Reliance companies:

Investigation Details

The ED's investigation focuses on:

• Alleged financial irregularities under the Prevention of Money Laundering Act
• Suspected illegal diversion of approximately ₹3,000.00 crore in loans disbursed by Yes Bank between 2017 and 2019
• A large-scale operation in July that involved searching 35 premises and 50 companies linked to Reliance Anil Ambani Group firms

Executive's Involvement

Ashok Kumar Pal, an executive of Reliance Power, was arrested by the ED. He is alleged to have played a key role in:

• Fund diversion
• Submission of a bogus bank guarantee worth over ₹68.00 crore to the Solar Energy Corporation of India

The arrest and ongoing investigation have raised concerns among investors, leading to the sharp decline in share prices of Reliance Group companies. As the investigation unfolds, market participants will be closely monitoring any further developments and their potential impact on the group's financial standing and market performance.

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.