Anil Ambani’s Reliance Group used dozens of shell entities to divert funds: Cobrapost report
This was allegedly done by way of granting loans to subsidiaries and allotment of debentures and preference shares and siphoning off those funds using SPVs or shell entities and then writing off the loans.
New Delhi: News website Cobrapost, in its report on the alleged siphoning of Rs. 28,874 crore by the Anil Ambani-led Reliance Group, on Thursday claimed that the modus operandi deployed included the use of dozens of pass-through entities, called Special Purpose Vehicles (SPVs), subsidiaries, shell companies or offshore entities based in the British Virgin Islands (BVI), Cyprus, Mauritius, the United States, the United Kingdom and Singapore, to route funds to Reliance Innoventure — the main holding company of the group.
This was allegedly done by way of granting loans to subsidiaries and allotment of debentures and preference shares and siphoning off those funds using SPVs or shell entities and then writing off the loans.
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This way, the ADA Group companies allegedly siphoned off Rs 28,874 crore, even as US$1.53 billion was diverted to India in suspicious transactions. Almost all of the offshore funds which landed in the ADA Group entities were raised in external commercial borrowings, according to the report.
Cobrapost highlights the purchase of a luxury yacht for $20 million in 2008 which, the report alleges, was bought by diverting funds from Reliance Communication to Reliance Transport & Travels Pvt. Ltd., an ADA Group subsidiary. This was done in a circuitous manner with layers added at each step to camouflage the diversion of the fund.
“There are many such instances of diversion of funds which the Cobrapost investigation has catalogued. The companies involved are Reliance Communication, Reliance Capital, Reliance Home Finance Ltd., Reliance Commercial Finance Ltd., and Reliance Corporate Advisory Services Ltd. We have identified dozens of subsidiaries and shell entities, which are involved in this fraud,” the Cobrapost report alleges.
Reliance Home Finance is alleged to have diverted around Rs 7,965 crore to 49 related entities; ultimately, these funds landed in 14 ADA-controlled entities. Reliance Commercial Finance, too, allegedly channelled Rs 4,979.9 crore through 27 companies to promoter interests. Further, Reliance Corporate Advisory Services is accused of diverting Rs 1,400 crore via intercorporate loans with zero interest, the report alleges.
However, Reliance ADA group has dismissed Cobrapost’s report as a “malicious and agenda-driven campaign” and alleged that the media platform’s “so-called exposé” is a deliberate attempt to damage the group’s reputation and mislead stakeholders. The Anil Ambani-led company alleged “Cobrapost has been dormant since 2019 and its revival is fully funded by entities with direct commercial interest in acquiring Reliance Group assets.”
