The Securities and Exchange Board of India (Sebi) has taken action against Anil Ambani and 24 other entities, including former key officials of Reliance Home Finance (RHFL), for their involvement in the diversion of funds from the company. Ambani has been barred from the securities market for five years and fined Rs 25 crore, according to a PTI report.
Additionally, he is prohibited from holding any position as a director or Key Managerial Personnel (KMP) in any listed company or intermediary registered with Sebi during this period, the report said.
RHFL has also been barred from the securities market for six months and fined Rs 6 lakh. Sebi’s extensive investigation revealed that Anil Ambani, aided by RHFL’s key managerial personnel, had devised a fraudulent scheme to siphon off funds from the company by disguising them as loans to entities associated with him.
According to the PTI report quoting Sebi’s order, despite clear directives from the Board of Directors to cease such lending practices and regular reviews of corporate loans, the company’s management disregarded these orders, indicating a significant failure of governance influenced by certain key managerial personnel under Ambani’s influence.
Sebi noted that given the circumstances, RHFL itself should not be held equally responsible as the individuals involved in the fraud. The remaining entities were found to have played the role of either recipients of illegally obtained loans or conduits to facilitate the illegal diversion of funds from RHFL.
In its final order, Sebi stated, “existence of a fraudulent scheme, orchestrated by Noticee No. 2 (Anil Ambani) and administered by the KMPs of RHFL, to siphon off funds from the public listed company (RHFL) by structuring them as ‘loans’ to credit unworthy conduit borrowers, and in turn, to onward borrowers, all of whom have been found to be ‘promoter linked entities’ i.e. entities associated/ linked with Noticee 2 (Anil Ambani)”.
Anil Ambani, in his capacity as “chairperson of the ADA group” and through his substantial indirect shareholding in RHFL’s holding company, orchestrated a fraudulent scheme, the Sebi order said.
Sebi’s order highlighted the company management and promoter’s reckless approach in sanctioning substantial loans to entities with minimal assets, cash flow, net worth, or revenue.
The suspicious nature of these “loans” is further amplified by the fact that many of the borrowers had close ties to RHFL’s promoters. Ultimately, most of these borrowers defaulted on their loan repayments, causing RHFL to fail in meeting its own debt obligations. This led to the company’s resolution under the RBI Framework, leaving public shareholders in a precarious situation.
RHFL’s share price plunged from around Rs 59.60 in March 2018 to a mere Rs 0.75 by March 2020, as the magnitude of the fraud became apparent and the company’s resources were depleted. Currently, over 9 lakh shareholders remain invested in RHFL, facing substantial losses.
Sebi has restrained 24 entities, including former key officials of RHFL – Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah – and imposed fines on them for their involvement in the case. Ambani, Bapna, Sudhalkar, and Shah have been fined Rs 25 crore, Rs 27 crore, Rs 26 crore, and Rs 21 crore, respectively.
Furthermore, the remaining entities, including Reliance Unicorn Enterprises, Reliance Exchange next Lt, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Big Entertainment Private Ltd, have each been fined Rs 25 crore for either receiving the illegally obtained loans or facilitating the illegal diversion of funds from RHFL.
In February 2022, Sebi had issued an interim order restraining Reliance Home Finance Ltd, Anil Ambani, and three other individuals (Amit Bapna, Ravindra Sudhakar, and Pinkesh R Shah) from the securities market until further notice for allegedly siphoning off funds from the company.
(With inputs from PTI)
Additionally, he is prohibited from holding any position as a director or Key Managerial Personnel (KMP) in any listed company or intermediary registered with Sebi during this period, the report said.
RHFL has also been barred from the securities market for six months and fined Rs 6 lakh. Sebi’s extensive investigation revealed that Anil Ambani, aided by RHFL’s key managerial personnel, had devised a fraudulent scheme to siphon off funds from the company by disguising them as loans to entities associated with him.
According to the PTI report quoting Sebi’s order, despite clear directives from the Board of Directors to cease such lending practices and regular reviews of corporate loans, the company’s management disregarded these orders, indicating a significant failure of governance influenced by certain key managerial personnel under Ambani’s influence.
Sebi noted that given the circumstances, RHFL itself should not be held equally responsible as the individuals involved in the fraud. The remaining entities were found to have played the role of either recipients of illegally obtained loans or conduits to facilitate the illegal diversion of funds from RHFL.
In its final order, Sebi stated, “existence of a fraudulent scheme, orchestrated by Noticee No. 2 (Anil Ambani) and administered by the KMPs of RHFL, to siphon off funds from the public listed company (RHFL) by structuring them as ‘loans’ to credit unworthy conduit borrowers, and in turn, to onward borrowers, all of whom have been found to be ‘promoter linked entities’ i.e. entities associated/ linked with Noticee 2 (Anil Ambani)”.
Anil Ambani, in his capacity as “chairperson of the ADA group” and through his substantial indirect shareholding in RHFL’s holding company, orchestrated a fraudulent scheme, the Sebi order said.
Sebi’s order highlighted the company management and promoter’s reckless approach in sanctioning substantial loans to entities with minimal assets, cash flow, net worth, or revenue.
The suspicious nature of these “loans” is further amplified by the fact that many of the borrowers had close ties to RHFL’s promoters. Ultimately, most of these borrowers defaulted on their loan repayments, causing RHFL to fail in meeting its own debt obligations. This led to the company’s resolution under the RBI Framework, leaving public shareholders in a precarious situation.
RHFL’s share price plunged from around Rs 59.60 in March 2018 to a mere Rs 0.75 by March 2020, as the magnitude of the fraud became apparent and the company’s resources were depleted. Currently, over 9 lakh shareholders remain invested in RHFL, facing substantial losses.
Sebi has restrained 24 entities, including former key officials of RHFL – Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah – and imposed fines on them for their involvement in the case. Ambani, Bapna, Sudhalkar, and Shah have been fined Rs 25 crore, Rs 27 crore, Rs 26 crore, and Rs 21 crore, respectively.
Furthermore, the remaining entities, including Reliance Unicorn Enterprises, Reliance Exchange next Lt, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Big Entertainment Private Ltd, have each been fined Rs 25 crore for either receiving the illegally obtained loans or facilitating the illegal diversion of funds from RHFL.
In February 2022, Sebi had issued an interim order restraining Reliance Home Finance Ltd, Anil Ambani, and three other individuals (Amit Bapna, Ravindra Sudhakar, and Pinkesh R Shah) from the securities market until further notice for allegedly siphoning off funds from the company.
(With inputs from PTI)