Anil Ambani and 24 other organizations have been banned from the capital market by market regulator Security and Exchanges Board of India (SEBI) for a period of five years, preventing the industrialist from having any affiliation with any listed company.
The industrialist and twenty-four other entities were prohibited by SEBI from diverting funds from Reliance Home Finance Ltd (RHFL). Anil Ambani was fined Rs 25 crore by the markets regulator, and he was prohibited for five years from having any affiliation with the securities market, including serving as a director or other senior executive in a listed business or as an intermediary registered with the regulator.
Additionally, Reliance Home Finance Ltd. was fined Rs. 6 lakh by the regulator and prohibited from the securities market for a period of six months.
In a 222-page ruling, SEBI said that Anil Ambani had hatched a fraudulent plan to embezzle money from RHFL by passing it off as loans to organizations connected to him, with the assistance of important managerial staff at the company.
The RHFL Board of Directors gave firm directives to halt these lending practices and conducted routine reviews of business loans, however the management of the company disregarded these directives. According to SEBI, this points to a serious governance breakdown that was caused by a few important managers who were influenced by Anil Ambani.
The market regulator further stated that its results have demonstrated that “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)”.
Former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R. Shah are among the other 24 companies that have been prohibited. The regulator fined Bapna Rs. 27 crore, Sudhalkar Rs. 26 crore, and Shah Rs. 21 crore.
A fine of Rs 25 crore was levied against each of the following companies: 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. “Either receiving the illegally obtained loans or acting as intermediaries to facilitate the illegal diversion of funds from RHFL” was the reason for these fines.
“Cavalier approach of the company’s management and promoter in approving loans worth hundreds of crores to companies that had little to no assets, cash flow, net worth, or revenue,” the markets regulator said in its ruling.
