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SBI probe flags Rs 5,500 crore deals among Anil Ambani companies

SBI has ordered an investigation — it suspects diversion of funds, evergreening of loans, preferential transactions.

, ET Bureau|
Updated: Jul 10, 2019, 03.35 PM IST
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Anil Ambani (File Pic)
MUMBAI: A probe commissioned by SBI has flagged transactions worth Rs 5,500 crore in the books of Reliance Communications and two other Anil Ambani-led Reliance Group entities for further investigation, four people with direct knowledge of the matter told ET. The probe into fund flows at RCom, Reliance Telecom and Reliance Telecom Infrastructure has examined related-party transactions, apparent evergreening of loans and seemingly preferential dealings with entities at which a few Reliance Group employees were directors. The Reliance Group was formerly known as the Anil Dhirubhai Ambani Group.

The probe, which looked at transactions between May 2017 and March 2018, examined over 100,000 entries. Funds flows involving three large entries are particularly under the scanner as the SBI-led lenders’ group suspects fund diversion. The lenders are now looking to initiate a deeper probe to ascertain the authenticity of the dealings of these three entities, said one of the persons. SBI had engaged accounting firm BDO in November 2017 to study the fund flows.

CASH-QUESTIONS


“The report has been tabled before the committee of creditors and questions based on the findings of the report have been raised with the management,” said one of the persons. “The probe came across several transactions which had no logic whatsoever. A deeper analysis showed that these were just adjustment entries made by the company. An indepth investigation is needed to track the flow of these funds.”

A spokesperson for SBI said the bank does not “comment on individual accounts and their treatment”. An RCom spokesperson said the company was undergoing insolvency and queries needed to be put to resolution professional Anish Nanavaty, who didn’t respond to ET.

RCom entered the bankruptcy process in May, when the appellate tribunal vacated a stay on insolvency proceedings against it.

Based on conversations with people who have seen the report, ET understands that a little-known entity, Netizen, received capex advances of Rs 4,000 crore in May 2017 through transactions emanating from Reliance Group companies. What raised suspicion was the size of the amount, which was later set off against liabilities.

“Ideally, the auditors of the company should have reported this transaction in the company’s financials, but they haven’t done so. The way the entity (Netizen) has been defined, it doesn’t technically fall within the purview of a related party,” said another person close to the development. Pathak HD & Associates was the auditor for Reliance Communications.

Questions were also raised on inter-corporate deposits of Rs 600 crore paid to another group company. As per the initial probe, this may have been a preferential transaction that was not carried out at an arm’s length. At least a dozen transactions of alleged evergreening of loans through the letter of credit route worth .`500 crore with three-four banks are also under scrutiny.

“A dozen transactions clearly hint towards banker facilitation in evergreening of loans by using multiple letter of credit transactions — these should be looked at in further detail,” said one of the persons who has seen the initial probe report. Reliance Group companies have a debt of over Rs 1 lakh crore with RCom accounting for Rs 49,193 crore, followed by Reliance Telecom at over Rs 24,306 crore.

Anil Ambani said recently that his group was fully committed to meeting all future debt-servicing obligations in a timely manner through asset sales that are already at various stages of implementation.

Global auditing firm PwC had recently informed the ministry of corporate affairs about certain alleged irregularities in the books of accounts of Reliance Capital and Reliance Home Finance, part of the same group. The irregularities, which involved alleged diversion of funds and transactions between the two firms and other group companies, came to light while PwC was auditing the books of the two companies for the first quarter ended June, ET had reported earlier.
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