MUMBAI: India’s financial markets watchdog has turned down requests from industrialist Anil Ambani and his corporate group to settle accusations regarding the misuse of nearly $700 million in company funds, according to documents reviewed by Reuters.
The Securities and Exchange Board of India (SEBI) rejected these settlement requests last week, citing allegations that Ambani and Reliance Infrastructure misdirected ₹65.26 billion (approximately $691 million) to companies connected to Ambani, who is the younger sibling of billionaire Mukesh Ambani.
In the past 18 months, Ambani has faced increasing scrutiny from regulators and law enforcement. Several executives from his group have been arrested on fraud charges, and some of Ambani’s assets have been frozen. The executives have insisted they did nothing wrong, and the legal cases are still ongoing.
Documents show that in September, SEBI claimed that the transactions linked to Ambani and Reliance Infrastructure constituted a “misuse of company funds,” suggesting they might be for personal gain rather than in the interest of public shareholders.
AMBANI GROUP ‘DENIES ALLEGATIONS’
When asked for a statement, a spokesperson for the Anil Ambani group firmly rejected the allegations, saying, “The allegations are categorically denied. The matters are sub judice, and the Group will continue to defend its position as legally advised.”
SEBI did not respond to a request for comments.
This recent settlement denial has not been reported before, with Reliance Infrastructure mentioning in an October filing that SEBI accused it of breaching rules concerning financial dealings with a related entity, though details were not disclosed.
In rejecting the settlement applications, SEBI referenced ongoing investigations by other Indian agencies focused on financial crimes. This marks Ambani’s second rejection for a settlement, as SEBI also dismissed his plea last year regarding allegations related to investments in Yes Bank.
Under SEBI’s settlement process, companies can choose to pay a penalty to resolve a case without admitting to any wrongdoing. If a settlement is rejected, SEBI generally issues a public order outlining the alleged violations, which can lead to monetary fines or restrictions on accessing financial markets. Companies may also appeal these orders in court.
Reliance Infrastructure is currently looking to raise funds, having received board approval to seek up to ₹30 billion from the public. The company previously disclosed financial exposure of ₹65.26 billion to engineering contractor CLE Private Ltd, describing it as an independent entity.
However, SEBI claims that Reliance Infrastructure actually redirected ₹176.7 billion (approximately $1.9 billion) to CLE, which went on to invest at least ₹112 billion in companies linked to Ambani’s Reliance ADA Group over ten years, until 2024.
Additionally, SEBI concluded that CLE did not function independently and was, “for all practical purposes, a Reliance ADA Group company” that was “indirectly controlled” by Ambani and a few key officials. An email sent to CLE seeking comments went unanswered as of Friday.
